China GDP Growth Weakest Since Late 2022

(RTTNews) - China's economy logged its weakest expansion since the final quarter of 2022 on declining investment and subdued domestic consumption, underscoring the need for stimulus measures to support growth.

Gross domestic product posted an annual growth of 4.3 percent in the second quarter after rising 5.0 percent in the preceding period, the National Bureau of Statistics reported Wednesday. The rate marked the slowest since the fourth quarter of 2022 and also came in weaker than forecast of 4.5 percent.

The government aims to achieve 4.5 percent to 5.0 percent growth this year. The International Monetary Fund expects China's GDP to grow 4.6 percent this year before slowing to 4.1 percent in 2027. Data showed that fixed asset investment declined 5.7 percent in the first half of the year, which was worse than forecast of 5.0 percent. At the same time, property investment slumped 18.0 percent from the last year.

Retail sales increased only 1.0 percent on a yearly basis in June. Nonetheless, sales rebounded from a 0.6 percent decline seen in May and confounded expectations for a decline of 0.1 percent.

Meanwhile, industrial production growth accelerated more-than-expected to 5.3 percent from 4.5 percent in the previous month. Economists had forecast an annual increase of 4.7 percent.

ING economist Lynn Song said China will be able to hit its full-year growth target. He noted that the sharp slowdown in GDP growth will likely prompt policymakers to take a more proactive approach in the coming months.

On the fiscal side, Song expects modest fiscal easing, likely aimed at supporting consumption and accelerating existing approvals for local government special bond issuance and infrastructure projects.

On the monetary side, the economist said there is a solid chance of a rate cut within this quarter.