China’s economic recovery set to slow further, with ‘worst yet to come’ for both supply and demand
- A set of key economic data to be released Monday will be closely studied for signs that the slowdown is serious enough to prompt authorities to step up support
- Fixed asset investment, retail sales and industrial production growth in October are all expected to have slowed
China’s economy likely continued to weaken across the board in October with little signs of bottoming out.
A set of key economic data to be released Monday will be closely studied for signs that the slowdown is serious enough to prompt authorities to step up economic support.
The weakness in the economy is coming from both the supply and demand sides, similar to when the economy was initially hit by the coronavirus in early 2020.
But the causes of supply shocks have shifted to electricity shortages, Beijing’s environmental curbs and a crackdown on financial risk which has hit the property market, while domestic demand continues to be hit by the Covid-zero strategy.
The power rationing that started in September likely extended into October, while elevated cost pressures continued to squeeze corporate profits, with both limiting factory output. A higher base for comparison last year might also drive the reading lower.
Economists expect industrial production to have expanded by 3 per cent from a year ago, the slowest pace since it contracted in early 2020, according to the median estimates in a Bloomberg survey.
A leading subindex in China’s purchasing managers’ index data that measures output also pointed to further softness, falling further into contraction territory in October.