Watching Slower Growth in China
In an interview with Bloomberg TV from the Group of 20 meeting in India, Treasury Secretary Janet Yellen noted that the United States was making progress on reducing inflation and did not expect the economy to enter a recession.
“For the United States, growth has slowed, but our labor market continues to be quite strong. I don’t expect a recession,” she said. “The most recent inflation data were quite encouraging.”
However, Yellen offered a cautionary note that slower growth in China could spill over to other world economies. This week, Reuters reported that China grew at “a frail pace” — 6.3% in the second quarter on a year-on-year basis, accelerating from 4.5% in the first three months of the year, but well below expectations of 7.3%, as demand weakened at home and abroad.
Economic momentum in China appears to have stalled. “The data suggests that China’s post-COVID boom is clearly over,” said Carol Kong, economist at Commonwealth Bank of Australia in Sydney.
“The higher-frequency indicators are up from May’s numbers, but still paint a picture of a bleak and faltering recovery and at the same time youth unemployment is hitting record highs.”
1. Reuters, July 17, 2023 “China’s frail Q2 GDP growth raises urgency for more policy support by Kevin Yao & Joe Cash