By Michael Hewson (Chief Market Analyst at CMC Markets UK)
- China Q2 GDP/Retail Sales (Jun) – 17/07 –. after stagnating in Q4 China's economy rebounded in Q1 to the tune of 2.2% as economy bounced back from its Covid lockdowns with a strong performance. Retail sales spending also rebounded strongly, however the rebound seen in Q1 has shown little sign of being sustained in recent months with economic activity domestically and externally slowing sharply in the wake of Chinese New Year. The April retail sales numbers saw an impressive rise of 18.4%, however the gain also needs to be set in the context of the Chinese economy being subject to various restrictions at the same time last year, when retail sales crashed by -11.1%, so the bar was quite low. The May numbers saw a gain of 12.7% when the same rules applied so while we've seen an improvement the gains have been tepid. Recent inflation numbers also suggest that demand is weak with PPI inflation falling at its fastest rate since 2015, at -5.4% while CPI slipping to a 2-year low of 0%. This week's Q2 GDP numbers is expected to see the Chinese economy slow on a quarterly basis to 0.6%, although on a year-on-year basis we could see a rise to 7%. Retail sales are expected to slow to 3%, while industrial production to slow from 3.5% to 2.5%, reinforcing the case for further stimulus.
