• China 2Q20 GDP recovers to 3.2% yoy
   
• China's industrial output continues to recover

• Consumption remains weak

• FAI fell 3.1% in the first half of the year

• The urban surveyed unemployment rate declined slightly

• Despite steady recovery, a hard battle still lies ahead

China's gross domestic product growth swung back to the black in the second quarter of 2020, driven by a recovery in production and spending amid coronavirus induced headwinds. The Chinese economy advanced 3.2% yoy in 2Q20, reversing from a 6.8% contraction in the prior period, as lockdown measures ended and policymakers stepped up efforts to support the economic recovery from the virus crisis. What’s more, the monthly activity and spending figures showed that growth was still accelerating heading into the third quarter on the back of strong policy stimulus.

On a quarter-on-quarter, seasonally adjusted basis, the world's second-largest economy grew 11.5% in the April-June term, more than reversing the 10% drop in 1Q and taking GDP back above the pre-virus high reached in 4Q 2019. This recovery was led by industry and construction, where output in 2Q was more than 2% above pre-virus highs. The recovery has been slower in the service sector, where output remains around 1% below pre-virus levels. Overall, business activity recovered in the quarter as China emerged from the pandemic, even as many parts of the world remained in lockdowns.

According to the preliminary estimates, the GDP of China was CNY45,661.4bn yuan in the first half of 2020. For 1H20 as a whole, the economy contracted -1.6% yoy from a year earlier.

A breakdown of the data showed the value added of the primary industry grew of 0.9% yoy; the secondary industry down by 1.9% and the tertiary industry saw a decline 1.6%. The value added of agriculture grew by 3.9% in 2Q, 0.4 percentage point higher than the growth in 1Q. In the first half of 2020, the value added of agriculture grew by 3.8%

Source: BIMB Securities Research - 16 Jul 2020