EU stagflation set to drag down China’s 2023 export growth amid sluggish demand, apathy to produce and invest
- China’s mechanical and electrical manufacturing, together with the textile industry, will be most affected by persistent stagflation in the European Union, said a new report
- In the first 11 months of 2022, the European Union was the second largest destination for China’s exports after the United States with shipments valued at US$517.9 billion
Persistent stagflation in the European Union is set to drag down China’s export growth by around two percentage points in 2023, adding more uncertainties to its post-coronavirus recovery, according to a new report.
Mechanical and electrical manufacturing, together with the textile industry, will be the most affected sectors, the report from Haitong Securities published on Thursday said.
In the first 11 months of 2022, the European Union was the second largest destination for China’s exports after the United States with shipments valued at US$517.9 billion, accounting for 15.8 per cent of total exports, according to the Post’s calculations based on data from China Customs.
But as the European Union’s economic growth will face greater downward pressure amid ongoing uncertainties caused by soaring energy prices, stagflation – which is a combination of high inflation and economic stagnation – may continue in 2023, according to the report.
Consumption may remain sluggish, and the willingness of enterprises to produce and invest will also continue to be under pressure
“Under the influence of high inflation and the continuous interest rate hike by the European Central Bank, consumption may remain sluggish, and the willingness of enterprises to produce and invest will also continue to be under pressure,” the report said.
The European Commission has estimated that the European Union’s gross domestic product growth will drop to 0.3 per cent next year, down from 3.3 per cent in 2022.