China’s economy is set to become the only major economy that has grown in 2020.
However, the latest data shows that the Chinese economy has grown at 2.3%. This is the slowest percentage since 1976 when GDP fell by 1.6%.
Economic growth has beaten expectations from the International Monetary Fund. The International Monetary Fund had hoped that the country’s economy would increase by 1.9%. This is the only major economy the IMF has projected growth.
Growth increased by 6.5% in the last quarter.
Yue Su, Principal Economist for the Economist Intelligence Unit, commented: “GDP data shows that the economy is almost normalized. This momentum continues, but the current outbreak of Covid-19 in several northern China provinces causes temporary fluctuations. It’s possible.”
The pandemic had a major impact on the economy, forcing the closure of factories and manufacturing plants, but the sector has recovered, rising 7.3%.
While manufacturing is on the rise, domestic products are still low. Li Wei, senior economist at Standard Chartered Bank, told Reuters: “While domestic consumption of food, clothing, furniture and utilities is below prior levels, the hospitality and transportation sector continues to face capacity and travel restrictions.”
Retail sales also fell to 4.6% in December. This is down from 5% in November. Retail sales fell 3.9% annually.
Julian Evans-Pritchard, senior Chinese economist at Capital Economics, wrote: Meanwhile, the tailwinds from last year’s stimulus should keep industry and construction strong for a while. ”
