© Reuters. FILE PHOTO: Border police officers in protective suits patrol next to a container ship at the Nanjing port in Jiangsu province, China July 10, 2022. China Daily via REUTERS
By Joe Cash
BEIJING (Reuters) – China’s export slump is expected to have accelerated in June, as sluggish overseas economies struggling with inflation and rising interest rates buy up fewer goods from Chinese factories.
Outbound shipments from the world’s second-largest economy were projected to have fallen 9.5% year-on-year, following a drop of 7.5% in May, according to the median forecast of 30 economists in the poll finalised on Wednesday.
That would be the worst decline since January, when China’s supply chains were grappling with a wave of COVID-19 infections unleashed by the end of harsh pandemic-related restrictions.
Chinese factory activity has been shrinking in recent months and policymakers are now reckoning with the prospect of prolonged slower growth in the world’s second-largest economy around just 3% annually, according to economists’ forecasts. That is less than half the rates typical throughout recent decades and creates the feel of an economy in recession.
One-third of respondents to the trade poll forecast that exports in June dropped by a double-digit percentage, as in January. Societe Generale (OTC:) was the most bearish, anticipating a drop of 15.7%.
Imports in June are expected to have shrunk by 4.0%, after a fall of 4.5% in May, reflecting persistently weak domestic demand.
China’s trade data will be released on Thursday.
Chinese consumer prices teetered on the edge of deflation in June while producer prices fell at their fastest pace in more than seven years, bolstering the case for further policy stimulus.
Weakness in exports was also evident in slower growth of daily average container throughput in June compared with a year earlier, Fitch Ratings said in a note on Monday, while it fell 0.4% year-on-year in the first week of July.
Premier Li Qiang, who took the reins of China’s economic policy apparatus in March, has talked up the prospect of policy measures to boost demand and invigorate markets, although few concrete measures have been announced, leaving investors wanting.
(Polling by Susobhan Sarkar and Devayani Sathyan; Reporting by Joe Cash; Editing by Edmund Klamann)
