Invest
Will China be the largest economy by the end of 2020?
With much of the world still fighting the COVID-19 pandemic and China bouncing back first, experts are predicting that the country could become the largest economy in the world.
Will China be the largest economy by the end of 2020?
With much of the world still fighting the COVID-19 pandemic and China bouncing back first, experts are predicting that the country could become the largest economy in the world.
China’s gross domestic product (GDP) expanded by 3.2 per cent in the three months to June from a year ago, reversing a 6.8 per cent decline in the first quarter and beating the median forecast of 2.4 per cent.
Commenting on the findings, Janus Henderson portfolio manager Mike Kerley said China's bounce back has put it in front of the world.
“China will be the first major economy to return to growth post-COVID-19, but following the weak first quarter, the economy is still 1.6 per cent below where it was a year ago in nominal terms,” he said.
“Even so, this is still an admirable achievement and likely to be markedly better than the US, Europe or the UK which will need a number of years to return to pre-virus levels.”
The rebound has been largely industry-driven, while consumer spending was weaker than expected. It also remains vulnerable to setbacks in foreign demand as lockdowns continue to hamper activity abroad.
“Although the headline numbers beat analysts’ expectation, delving deeper suggests that the recovery still remains lumpy,” Mr Kerley said.
“The government’s focus on infrastructure spending and manufacturing recovery has borne fruit, with industrial production rising by 4.8 per cent and fixed asset investment seeing an improving trend although still below the levels of last year.
“Property investment rose by 8.4 per cent, although manufacturing investments showed no material improvement, suggesting that companies are still reluctant to commit capital in these uncertain times.”
However, China’s economic growth was stimulated by infrastructure and property growth, with retail sales continuing to lag.
“The real disappointment, though, was retail sales, which fell by 1.8 per cent and below expectations of a positive number,” Mr Kerley said.
These numbers have followed measures by the government since the pandemic started to shore up the economy, including tax and fee cuts, cheaper loans and increased fiscal spending.
The poor retail picture may be less negative than the headline data indicates. Sales of cosmetics, beverages, telecommunications equipment, daily-use articles, and alcohol and tobacco all posted double-digit increases. Autos and petroleum products posted large declines, though were likely influenced by one-off factors.
“Unsurprisingly, catering, tourism and hospitality continued to look weak, although less so than a month earlier while the sales of cosmetics, telecom products and home appliances were 21 per cent, 19 per cent and 10 per cent higher, respectively, than a year earlier,” Mr Kerley said.
About the author
About the author
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Dissecting the budget and what it means for your equities, property and super
Listen now
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
