За словами прем’єра Дениса Шмигаля, 911,5 млн отримає Харківщина та понад 363 млн грн Чернігівщина
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A broad array of Chinese data on Tuesday highlighted intensifying pressure on the economy from multiple fronts, prompting Beijing to cut key policy rates to shore up activity but analysts say more support is needed to revitalize growth.

Just before the release of a batch of July data, China’s central bank unexpectedly chopped one set of key interest rates and followed it with cuts on other rates hours later, underlining the rapid loss of the post-COVID economic rebound that has shaken global financial markets.

Tuesday’s data released by the National Bureau of Statistics (NBS), which comes on top of a raft of weak indicators from last week, showed retail sales, industrial output and investment all growing at a slower than expected pace – indicating the engines of business and consumption in the world’s second biggest economy were severely underpowered.

Additionally, China suspended publishing youth jobless data, which hit a record high of 21.3% in June. 

“All the main activity indicators undershot consensus expectations in July, with most either stagnant or barely expanding in month-on-month terms,” said Julian Evans-Pritchard, economist at Capital Economics.

“And with financial troubles at developers such as Country Garden likely to weigh on the housing market in the near-term, there is a real risk of the economy slipping into a recession unless policy support is ramped up soon.”

Nomura analysts were equally downbeat on China’s economic outlook.

“We believe the Chinese economy is faced with an imminent downward spiral with the worst yet to come, and the rate cut this morning will be of limited help,” they said.

Most economists see downside risk to Chinese growth, but they do not expect a recession.

Industrial output grew 3.7% from a year earlier, slowing from the 4.4% pace seen in June, the NBS data showed, and was below expectations for a 4.4% increase in a Reuters poll of analysts.

Retail sales, a gauge of consumption, rose 2.5%, down from a 3.1% increase in June and missed analysts’ forecasts of 4.5% growth despite the summer travel season.

It was the slowest growth since December 2022, showing how much of a challenge authorities face as they try to make consumption the key driver of future economic growth.

More stimulus

Asian stocks stalled at one-month lows, the yuan hit a 9-month nadir while the dollar held broadly firm after the weak Chinese data and latest policy easing measures.

Following the first rate cuts, China’s major state-owned banks were seen selling U.S. dollars and buying yuan in a bid to stem rapid declines in the currency, three people with direct knowledge of the matter said. Sovereign bond yields fell to three-year lows, and benchmark stock indexes were down.

Record-low credit growth and rising deflation risks in July necessitated more monetary easing measures to arrest the slowdown, market watchers said, while default risks at some housing developers and missed payments by a private wealth manager also soured market confidence.

Nie Wen, an economist at Hwabao Trust, expects special bonds to be introduced urgently and said the probability of a reserve requirement ratio (RRR) cut in the short run is relatively large.

Policymakers last month released a batch of stimulus measures, from boosting auto and home appliances consumption, relaxing some property restrictions to pledging support to the private sector, as a post-COVID rebound rapidly lost steam since the second quarter.

The catering sector, which reaped benefits from the COVID reopening, saw slower revenue growth in July from June.

Investment in the private sector shrank 0.5% in the first seven months, extending 0.2% decline in the first half of 2023.

Structural pains

The persistent drag in the property sector, mounting local government debt pressure, high youth jobless rate and cooling foreign demand continue to be major impediments to fostering a sustainable economic revival.

China is undergoing a painful transition to a less debt-fueled, less property-centric and more consumer-driven economy, said Robert Carnell, Asia-Pacific head of research at ING.

“We will continue to see weak macro data for the foreseeable future. It is a necessary part of the adjustment and is far preferable to resurrecting the debt-fueled property model that propelled growth previously. But we do need to lower our expectations for China’s growth.”

Other data on Tuesday showed fixed asset investment expanded 3.4% in the first seven months of 2023 from the same period a year earlier, versus expectations for a 3.8% rise. It grew 3.8% in the January-June period.

Investment in the property sector tumbled 8.5% year-on-year in January-July, after shrinking 7.9% in January-June, extending its fall for the 17th consecutive month.

The nationwide survey-based jobless rate climbed slightly to 5.3% from 5.2% in June. Among OECD members, the average unemployment rate was 4.8%, with youth joblessness around 10%.

China set its 2023 growth target at around 5%, but Nomura analysts warn the country could miss the goal again as it did last year.

“We also see bigger downside risk to our 4.9% y-o-y growth forecast for both Q3 and Q4, and it is increasingly possible that annual GDP growth this year will miss the 5.0% mark.”
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До ліквідації наслідків долучилися майже 200 пожежників і рятувальників
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The Russian ruble on Monday reached its lowest value since the early weeks of the war in Ukraine as Moscow increases military spending and Western sanctions weigh on its energy exports.

It led Russia’s central bank to announce it will hold an emergency meeting Tuesday to review its key interest rate, opening the possibility of an increase in borrowing costs that would support the flagging ruble.

The Russian currency passed 101 rubles to the dollar, continuing a more than 25% decline in its value since the beginning of the year and hitting the lowest level in almost 17 months. The ruble recovered slightly after the central bank’s announcement.

The meeting was set after President Vladimir Putin’s economic adviser, Maksim Oreshkin, blamed the weak ruble on “loose monetary policy” in an op-ed Monday for state news agency Tass. He said a strong ruble is in the interest of the Russian economy and that a weak currency “complicates economic restructuring and negatively affects people’s real incomes.”

Oreshkin said Russia’s central bank has “all the tools necessary” to stabilize the situation and said he expected normalization shortly.

Bank deputy director Alexei Zabotkin told reporters Friday that it is adhering to a floating exchange rate because “it allows the economy to effectively adapt to changing external conditions.”

Analysts say the weakening of the ruble is being driven by increased defense spending — leading imports to rise — and falling exports, particularly in the oil and natural gas sector. Importing more and exporting less means a smaller trade surplus, which typically weighs on a country’s currency.

The Russian economy is now “working on different types of state orders related to the war, such as textile enterprises, pharmaceuticals and the food industry,” said Alexandra Prokopenko, nonresident scholar at the Carnegie Russia Eurasia Center and a former Russian central bank official.

Pivoting the entire economy to a war footing not only drives up imports but also raises the prospect of worsening inflation, she said.

To help lessen that prospect, the central bank said last week that it would stop buying foreign currency on the domestic market until the end of the year to try to prop up the ruble and reduce volatility.

Russia typically sells foreign currency to counter any shortfall in revenue from oil and natural gas exports and buys currency if it has a surplus.

The central bank also enacted a big increase of 1% to its key interest rate last month, saying inflation is expected to keep rising and the fall in the ruble is adding to the risk. The next meeting to discuss Russia’s key interest rate was planned for 15 September.

On Monday, some Russians in Moscow appeared concerned about the weakening currency.

“Prices will rise, which means that the standard of living will fall. It has already fallen, and it will fall even more — there are definitely more poor people,” said Vladimir Bessosedny, 63, a retired teacher.

Others hoped the fall of the ruble was temporary and that it would stabilize.

In January, the ruble traded at about 66 to the dollar but lost about a third of its value in subsequent months.

After Western countries imposed sanctions after the invasion of Ukraine in February 2022, the ruble plunged as low as 130 to the dollar, but the central bank enacted capital controls that stabilized its value. By last summer, it was in the 50-60 range to the dollar.

Zabotkin said Friday that international sanctions had cut off a significant amount of imports to Russia, contributing to the ruble’s fall, but he dismissed speculation that capital flight from Russia also was to blame, saying the idea was “not substantiated.”
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