China emerges from recession in August after prices rise
China recorded a rise in the consumer price index in August, allowing the world’s second-largest economy to emerge from the financial downturn despite weak domestic consumption that complicates the economic recovery.
The Office of National Statistics announced on Saturday that the Consumer Price Index, which is considered the main measure of inflation, rose in August by 0.1% at an annual rate.
In July, China witnessed a financial contraction for the first time since 2021, with prices declining by 0.3% at an annual pace.
Analysts surveyed by Bloomberg had expected a larger rise in prices of 0.2% in August.
Price deflation, or financial deflation, occurs when the prices of goods and services decline, which is the opposite of inflation.
In late 2020 and early 2021, China witnessed a short period of financial contraction as a result of the collapse in the price of pork, the most consumed in the country. The previous financial contraction dates back to 2009.
Despite the rise in prices in August, a number of analysts do not rule out their decline again in the coming months, in light of the crisis in sectors that constitute a main engine of growth in China, and the rise in youth unemployment to a record level exceeding 20% in June, which prompted the authorities to suspend the publication of this article. Monthly figures.
The crisis in the real estate sector, which has long represented a quarter of China’s gross domestic product, constitutes a major obstacle to economic recovery, while major real estate development companies face a faltering financial situation. China also suffers from difficulties in the export sector, which has traditionally been a pillar of growth in this country.
Exports declined in August, for the fourth month in a row, at a rate of -8.8% at an annual rate, as a result of weak external demand, according to official figures.
This situation is directly reflected in jobs in tens of thousands of exporting companies, which are recording a slowdown in their activity.
Also, on Saturday, the Bureau of Statistics indicated that the production price index declined again in August by -3% for the 11th month in a row.
This indicator reflects the cost of goods leaving factories, and gives an overview of the state of the economy in general, and low production prices mean a decline in the profit margin for companies.
Analysts had expected this decline after the index fell by 4.4% in July.
(AFP)
2023-09-09 11:19:02
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