China

China is growing again

The Chinese economy returned to a growth path in the past second quarter with great momentum. The gross domestic product increased by more than eleven percent compared to the previous quarter, thus fully offsetting the roughly ten percent slump at the beginning of the year. The pre-crisis level of economic output was restored and growth of 3.2 percent was achieved compared with the second quarter of 2019. That is remarkable. However, the recovery is not balanced. The industry was able to quickly resume production after the comparatively short corona lockdown in February and has now almost returned to normality. With its high share of around 40 percent, it has decisively stabilised the overall economy. Private consumption, on the other hand, continues to stumble, weighed down by people’s fears of job and income losses and of a second wave of infection. For this reason, the state has had to provide decisive…

China: More and more signs of recovery

  In most areas of the Chinese economy, signs of recovery now predominate. Not only do the survey results now signal growth again, but the „hard“ economic indicators have also turned to a recovery path. Industry has returned to its pre-crisis level and has been in the black since April. Even a slight increase in profits has now been reported. The retail sector has at least narrowed the gap to last year, at least noticeably, to which the strong sales of car dealers in recent weeks have contributed in particular. In fact, they were able to completely make up for their 80-percent decline from February. There is thus much to suggest that the figures on economic growth in the second quarter, which China will publish in about two weeks‘ time, will be good. Compared to the previous year, there should be a slight increase again, which would correspond to a…

China’s economy shrinks significantly in the first quarter

As a result of the corona lockdown in February, China has lost about one-tenth of its economic output in the first quarter of this year, representing a 6.8 percent drop in GDP compared to the first quarter of 2019, by far the lowest figure for Chinese economic growth since the country began publishing quarterly growth rates in 1992 and probably the sharpest drop in growth since the turmoil of the Cultural Revolution in the late 1960s. However, the economic data released today also show how China’s economy has progressed since the cautious easing of rigid restrictions in March. According to official data, industry increased production in March by almost a third compared with the previous month, and the year-on-year gap narrowed from over 13 to just over one percent. By contrast, consumption is recovering only very tentatively. Retail sales in March remained deep in the red compared to the previous…

China: Growth forecast 2020 reduced to zero

As the country of origin of the pandemic, China was the first economy to fall into the Corona crisis. The Chinese economy experienced an unprecedented slump, as shown by the February figures from industry and retail, which were in double digits of minus. Since the beginning of March, the Chinese authorities have been relaxing the strict restrictions on public life and the economy is slowly beginning to recover. However, daily data on economic activity show that the road back to normality is very bumpy and will probably take a long time. The stumbling blocks are not only the high security requirements to prevent a new wave of infection. The lockdown, which lasted for weeks, has deeply unsettled consumers. Shops and restaurants are still being avoided. In addition, the global economy is facing an ever deeper recession. Large parts of the Chinese export economy are facing a dramatic drop in demand….

Oil: Supply side is on the move and China is going bargain hunting!

The epic drop in oil prices is causing the three biggest oil producers Saudi Arabia, Russia and the USA to talk to each other again. Meanwhile, the US president is tweeting and announcing an imminent cut in Opec+ production of 10 million barrels per day. The oil price has risen sharply as a result. Since Wednesday the Brent crude oil price has risen by over 25 percent. However, neither Russia nor Saudi Arabia has confirmed any agreement. Only a virtual special meeting has been arranged for Monday – but nothing more so far. It will not be easy, however, and the US oil industry will have to play its part. If there is no signal here, the remaining OPEC+ countries will also hold back. The increase in American oil reserves could at least be a signal of this kind. However, it would be better if the US frackers could agree…

Deep red economic figures from China

It was more than foreseeable that the corona shutdown in China would result in massive economic losses. However, it was difficult to estimate how large the losses would be and even more difficult to predict whether the Chinese leadership would even reveal the full extent of the collapse. Even the announcement of the record-low purchasing managers‘ indices two weeks ago came as a certain surprise. The now published growth figures from industry, retail trade and construction reflect the devastating mood polls of February: economic activity has collapsed in the double-digit percentage range. Industrial production contracted by a quarter in February compared to the already weak previous month. Output in January and February combined was more than 13 percent below the level of the same period in 2019, while retail sales fell by more than 20 percent year-on-year. Taking into account the currently high inflation, they are likely to have collapsed…

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