China's economy grew at a less-than-expected 6.3% rate in the second quarter of the year, raising concerns that the government may miss its growth target for 2023.
Growth Fell Short of Target: The 6.3% GDP growth rate, which quickened from 4.5% in the first quarter, fell short of analysts' estimate of 7.3%. On a quarterly basis, GDP expanded just 0.8% in Q2, compared to 2.2% growth in Q1. For the first half of the year, GDP grew 5.5%.
economists say China may miss its full-year growth target of around 5% if the slowdown persists. Alvin Tan of RBC Capital Markets warned "At this pace of deceleration, there's now actually a risk that the growth target may not be achieved."
The IMF expects China to be the top contributor to global economic growth over the next five years.
Other Macro Data Disappoints: China's retail sales grew 3.1% in June, slowing from 12.7% in May. Industrial output growth accelerated to 4.4% but demand remains weak. Exports dropped 12.4% in June, the worst decline in three years.
Policy Steps Expected: Analysts expect Chinese policymakers to announce more stimulus measures to boost the economy, including fiscal spending, property easing, and support for consumers and businesses. However, aggressive stimulus is seen as unlikely due to debt concerns.
China's central bank held the MLF rate steady today after a cut in June but reduced liquidity injections.
In summary, China's weaker-than-expected growth in Q2 raises worries over the country's economic recovery and greater stimulus measures may be needed to meet official targets. The headline succinctly captures this key takeaway.
