China has a slowdown and closes the 2nd quarter with a 7.9% increase in GDP

China ended the 2nd quarter of 2021 with an increase of 7.9% in GDP (Gross Domestic Product), announced the Chinese government this Wednesday (14.Jul.2021). The volume is based on the 12 months ending June 30. The result is slightly lower than Reuters forecasts of 8.1% heating, based on the drop in consumption driven by higher raw material costs and new outbreaks of covid by the world. Despite being positive, it doesn’t compare to the record growth of the 1st quarter, when the Asian giant saw its GDP increase 18.3%. The slowdown was expected since last Friday (9.Jul). The main indication was the announcement by the Chinese central bank about the cut in the compulsory reserve index – the amount of money that banks must keep in reserve – for the first time since April 2020. The objective is to sustain the post-Covid economic recovery, which it already loses strength. The measure should come into effect this Thursday (15.jul). This and other changes should force a reduction in consumer inflation to 1.5% in 2021. Last year, the index was at 2.5%. China’s rapid V-shaped recovery caught the world’s attention from the 2nd quarter of 2020, when the country managed to advance 3.2% after falling -6.8% in the first 3 months of the 1st year of the pandemic . As a result, the country ended 2020 with a 2.3% GDP growth – the lowest value in 44 years. The solid external demand for the country’s exports boosted the growth of the 2nd largest economy in the world, a rare case in the midst of the pandemic. Now, however, the advance is weakening amid scarcity and consequent increase in the prices of raw materials, such as semiconductors, for the manufacturing activity. Even at the beginning of the year, China set an annual economic growth target of 6% – a number below analysts’ expectations, but which leaves more room for policy makers to deal with uncertainties, Reuters pointed out. continue reading