China’s economic outlook worsens on fears over key sectors and Covid-19

Chinese flag is seen in front of a building in Beijing

By Ellen Zhang and Liangping Gao and Ryan Woo

BEIJING (Reuters) – Persistent weakness in China’s housing market and manufacturing sector last month, which together account for half of the country’s gross domestic product (GDP), renew risks to an economic recovery already threatened by disruptions caused by restrictions. spreads of Covid-19.

Nearly 70 Chinese cities reported falls in new home prices in August, the biggest since the start of the Covid-19 pandemic, according to the China Index Academy on Thursday, one of China’s largest independent real estate research firms.

Also Thursday, a private sector survey showed that China’s industrial activity contracted for the first time in three months in August, amid weakening demand, while power outages and new outbreaks of Covid-19 halted production. .

The world’s second-largest economy braked sharply in the second quarter due to widespread Covid-19 lockdowns. Mounting evidence suggests the nascent third-quarter recovery is in danger of stalling due to further outbreaks of Covid-19 and a prolonged weak outlook for the housing sector, prompting economists to lower their GDP forecasts.

New home prices in 100 cities surveyed by the China Index Academy were down 0.01% from a month earlier, unchanged from July, reflecting the continued cooling of the housing market.

Nationwide, new home sales by floor area fell 32% in August from a year earlier, slowing the decline slightly from July’s low of 33% and marking the 13th month of double-digit declines, a separate report showed. from the E-house China Research and Development Institution this Thursday.

Analysts say weakening prices will continue to dampen homebuyer confidence, prolonging the housing slowdown and suggesting a further loss of economic momentum.

The unexpectedly weak reading in the Caixin PMI private survey on Thursday echoed the official PMI released on Wednesday, which is also in contraction territory.

The resilience of Chinese manufacturing, which accounted for 27.4% of China’s GDP in 2021, since the start of the Covid-19 pandemic has kept global supply chains running.

But widespread Covid-19 restrictions in China this year with the emergence of the Omicron variant are threatening to unbalance the industry.

(Reporting by Ellen Zhang, Liangping Gao and Ryan Woo)



The article is in Portuguese

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