Thursday’s data add to expectations that Beijing will need to do more to shore up a shaky post-pandemic recovery
China’s economy stumbled in May with industrial output and retail sales growth missing forecasts, adding to expectations that Beijing will need to do more to shore up a shaky post-pandemic recovery.
Retail sales – a key gauge of consumer confidence – rose 12.7 per cent, missing forecasts of 13.6 per cent growth and slowing from April’s 18.4 per cent. The figures also reinforce the case for more stimulus as China faces deflationary risks, mounting local government debts, record youth unemployment and weakening global demand.
China’s central bank on Thursday cut the interest rate on its one-year medium-term lending facility, the first such easing in 10 months, paving the way for cuts in the benchmark loan prime rates next week. The move was expected after it trimmed some short-term rates earlier in the week. The country’s biggest banks recently cut their deposit rates to ease pressure on profit margins and encourage savers to spend more.
However, he warned the recovery faces challenges including “a complicated and grim international environment, sluggish global economic recovery” and well as “insufficient domestic demand.”
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