2023-06-15 13:34:10
Official data from the National Bureau of Statistics in China showed, today, Thursday, that the country’s economic recovery has slowed down and the youth unemployment rate has risen to a record level, while a number of economists are calling for the adoption of a recovery plan, while the central bank cut the interest rate on medium-term financing for financial institutions. to support growth.
It seems that the long-awaited recovery following the authorities lifted the health restrictions imposed to limit the spread of the Corona pandemic at the end of 2022, began to weaken in the second largest economy in the world in recent weeks, and its effects did not appear in some sectors.
Last month, the unemployment rate reached 20.8%, which is a new record in the Asian country. This rate, which pertains to the youth segment between the ages of 16 and 24, continued to rise in recent months and reached 20.4% in April.
However, the unemployment rate for the entire working population did not change in a month and amounted to 5.2%, but this rate only includes urban areas, so it only reflects a partial picture of the situation.
As for retail sales, the main indicator of household consumption, it faced a setback in May, rising 12.7% on an annual basis, but at a weaker pace than it recorded in April by regarding 18.4%.
Industrial production also slowed in May, 3.5% year-on-year, and had risen by 5.6% in the previous month when factories gradually returned to full capacity.
Fixed-asset investment also slowed, registering a 4% year-on-year increase during the first five months of the year, compared to 4.7% previously.
Analysts warn that Chinese data readings last month might be very misleading when compared to the very poor performance last year when many cities were under strict lockdowns due to Corona.
reduce interest rates
To support growth, China’s central bank cut its medium-term financing rate on Thursday for financial institutions, marking its third policy change in days.
The Chinese Central Bank said that the interest rate on its loans granted for one year to financial institutions will decrease by a tenth of a percentage point to regarding 2.65%.
The Chinese central bank stated that it had injected liquidity into the markets worth 237 billion Chinese yuan ($33 billion).
The decision reduces financing costs for commercial banks to encourage them to grant more loans on better terms, thus supporting the economy.
The recovery in China is still “fragile” and is conditional on the support of public authorities, according to World Bank estimates on Wednesday. The economy is also suffering from heavy indebtedness in the real estate sector, the traditional engine of growth, sluggish consumer confidence and slowing global demand for Chinese goods.
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