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China’s growth slows down, how does this affect Peru?

China’s Q2 GDP shrinks from Q1, year-on-year growth slows sharply

The ubiquitous lockdowns that were introduced in China Due to the new outbreak of covid-19, this began to affect its economic growth, which slowed down in the second quarter of this year.

Gross domestic product grew by just 0.4% between April and June compared to the previous year, according to Reuters. On a quarterly basis, GDP fell 2.6% in the second quarter quarter-on-quarter, compared to an expected fall of 1.5% and revised growth of 1.4% in the previous quarter.

There was a 6.9% contraction in the first quarter of 2020 due to the impact of the first wave of covid-19.

Shanghai, which went into lockdown first, also saw a 13.7% year-on-year contraction, while Beijing, the nation’s capital, saw a 2.9% year-on-year contraction over the same period. .

Will the Chinese economy improve?

As a result of the fight against covid-19, restrictions were lowered and the forecast improved in June; however, analysts warn that the country will not recover quickly.

However, China is increasing political support for the economy. analysts say official growth target of around 5.5% this year will be difficult achieve without abandoning its rigorous COVID zero strategy. A Reuters poll predicts growth will slow to 4% in 2022.

How is the recession in China affecting the economy of Peru?

In this sense, according to International Monetary Fundeach additional point of GDP growth in China is associated with 0.4 percentage points of greater dynamism in the Peruvian economy.

In addition, when an advanced economy such as China raises interest rates, it attracts capital inflows from emerging economies, which reduces the country’s availability of finance, makes credit more expensive, and affects economic growth prospects.

Source: RPP

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