China's second-quarter GDP growth slows to 6.2% year-on-year, its lowest level in 27 years

BEIJING (Reuters) – China's economic growth has slowed to 6.2% in the second quarter from the previous year, its weakest in at least 27 years, as demand domestic and foreign trade was decreasing as a result of the increased trade pressure exerted by the United States.

However, the larger-than-expected gains in June's industrial output and retail sales showed some signs of stabilization.

China's trading partners and financial markets are keeping a close eye on the health of the world's second-largest economy, as the Sino-US trade war gets longer and more expensive, fueling fears of a global recession.

Monday's growth data marked a further slowdown for the economy compared to 6.4% in the first quarter, as Beijing is expected to announce more measures to boost consumption and investment and restore business confidence .

Analysts polled by Reuters forecast a 6.2% rise in gross domestic product (GDP) in the third quarter, the slowest pace since the first quarter of 1992, the oldest quarterly data recorded.

Beijing relied heavily on fiscal stimulus to support growth this year, announcing massive tax cuts of nearly 2 trillion yuan ($ 291 billion) and a $ 2.15 billion quota. yuan for special bonds issued by local governments and aimed at boosting infrastructure construction.

However, the economy has been slow to react and the business climate remains cautious.

Prime Minister Li Keqiang said this month that China will make timely use of reductions in reserve requirement ratios (RRRs) and other bank financing tools to support small businesses, while reiterating the wish not to resort to flood-like stimulus.

But after the weak May results, data on industrial production, retail sales and capital investment all surpassed analysts' forecasts, suggesting that Beijing's efforts may begin to have an effect.

Data from the National Bureau of Statistics show that industrial production grew 6.3% over the previous year, reaching its lowest level in 17 years in May and exceeding expectations of 5.2% of GDP. growth.

Capital investment for the first half of the year increased 5.8% over the previous year, while analysts forecast an increase of 5.5% and 5.6% in the first five months of the year. months of the year.

Retail sales rose 9.8% in June, exceeding expectations of a slight decline to 8.3%. Auto sales jumped 17.2% during the month, following a 2.1% gain in May.

Nevertheless, the economy remains in a complex situation, with external uncertainties on the rise, the statistics office said in its statement.

In the face of further downward pressure, China will make efforts to ensure steady economic growth, the bureau said.