Economic woes deepen with housing market slump
China's economy is showing little sign of a rebound, with fresh stress in the property market and deflation threatening the growth outlook. Official data on Tuesday will likely show modest gains in industrial output, retail sales and fixed-assets investment in July from a year ago, although growth rates are still well below pre-pandemic levels. Real estate investment probably shrank further, with confidence shaken by a possible default by a major developer and housing sales continuing to fall as well.
Adding to the gloom, heavy rain and deadly floods last month in the southwest and more recently in the north of China likely hindered construction and infrastructure projects, curbing economic activity. The numbers follow economic news in the past week that showed deflation arriving in July as manufacturers and retailers cut prices in a bid to lure buyers and move excess stock. Exports and imports also plunged more than expected, while borrowing by consumers and businesses slumped.
Beijing has made several pledges and announced incremental measures to support growth, but has avoided the kind of monetary and fiscal stimulus implemented during previous downturns. A weaker yuan and high debt levels have prompted more caution. The government also set a fairly conservative growth target of about 5% for the year, which remains on track even without major stimulus.
The People's Bank of China is likely to keep a key policy interest rate unchanged at 2.65% on Tuesday, according to economists surveyed by Bloomberg. Elsewhere, US data may show resilient consumer demand, UK wage and inflation numbers will guide investors betting on future Bank of England rate hikes, and Japanese growth statistics will also be released. Following
. Read more on economictimes.indiatimes.com
