By Gina Lee
Investing.com – Chinese quarterly growth data for the third quarter showed a continuing economic recovery from the impact of COVID-19. However, overall growth missed forecasts, indicating that challenges remain in the road ahead for the country.
Data from the National Bureau of Statistics released earlier in the day showed that GDP grew 4.9% year-on-year, smaller than the 5.2% predicted in forecasts prepared by Investing.com but larger than the second quarter’s 3.2% growth. The GDP’s quarter-on-quarter growth stood at 2.7%, which also missed the forecast 3.2% growth and much smaller than the second quarter's 11.5% growth.
Industrial production grew 6.9% year-on-year in September, beating the forecast 5.8% growth and August’s 5.6% growth. Retail sales grew 3.3% year-on-year in the same month, also beating the forecast 1.8% and August’s 0.5% growth. The unemployment rate was 5.4%, down from the previous quarter’s 5.6% reading.
“The rebound in Q3 GDP was less strong than expected, but was still a decent 4.9% year-on-year … September data beat expectations, suggesting a pickup in momentum towards the latter part of the third quarter ... The pickup in momentum was broad-based, which bodes well for the fourth quarter outlook,” Westpac head of macro strategy for Asia Frances Cheung told Reuters.
However, as the number of COVID-19 cases continues to rise globally and new restrictive measures in Europe and the U.S. revive fears of fresh lockdowns, the data comes as a disappointment to investors who were expecting the data to show a robust recovery.
China has seen a steady recovery from the economic impact of the lockdowns seen during the first quarter to curb the spread of COVID-19, and the uptick in retail sales also pointed to increasing consumption in the third quarter. The government has also rolled out measures, including increased fiscal spending, tax relief and cuts in lending rates and banks’ reserve requirements, to aid the economic recovery and support employment. China is the only country forecast to report growth in 2020 by the International Monetary Fund, with the country expected to report a 1.9% expansion for the full year.
However, persistently high unemployment and feats of a fresh COVID-19 outbreak has been China’s Achilles’ heel on the road to recovery. Premier Li Keqiang warned earlier in the month that China needs to make arduous efforts to achieve its full-year economic goals.
Meanwhile, the country continues to monitor a new outbreak of cases in the city of Qingdao, with 13 cases reported for Oct. 17.