China’s Economic Slowdown in Q2 2024
China’s economy experienced a deceleration in the April-June quarter of 2024, according to official data released on Monday. The second-largest economy posted a growth rate of 4.7% in Q2, marking the slowest pace since the first quarter of 2023.
This slowdown is primarily attributed to the prolonged decline in the property market and concerns over job security, which have dampened domestic demand. In the previous quarter (Q1 2024), the economy had grown by 5.3%.
An analyst from Citi warns that weak domestic demand could further erode inflation and production strength. The situation has raised concerns ahead of the third plenum and Politburo meeting scheduled for July.
The government has set a growth target of 5% for 2024, but analysts suggest that additional stimulus may be necessary to achieve this goal.
To address the property market crisis, China has encouraged infrastructure investment and allocated funding to high-tech manufacturing. However, industrial output has outpaced domestic demand, leading to deflationary risks and increased government debt.
Last month, the central bank governor indicated that it will employ interest rates and reserve requirement ratios to support economic growth.
