A slowdown in China’s economic recovery is a warning sign to the world Business and Economic News

The economy was expected to decline in recent times, but the smoothing will come sooner than expected.

The Covid-19 pandemic is slowing China’s V-shaped economic rebound, and it has sent a warning to other countries to find out how sustainable the recovery will be.

The volatile outlook was highlighted on Friday when the People’s Bank of China reduced the amount of money most banks need to hold in reserve to boost lending. The PBOC said the move was not driven by renewed stimulus, as the minimum cut-off width of most banks ’reserve ratio was unpredictable.

According to a survey by economists at Bloomberg, Thursday’s data is expected to slow growth in the second quarter, from a record 8.3% in the first quarter. Key readings on retail sales, industrial production and fixed asset investment will also be moderate.

Moving quickly to the RRR of the lowest PBOC banks is a way to secure the high plateaus from here recovery, rather than stumble.

The economy was always expected to fall from the heights of the initial bounce as it cleared last year’s low base effect. Economists say the smoothing has come sooner than expected, and can now be curtailed around the world.

“There is no doubt that the impact of China’s slowdown on the global economy will be greater than it was five years ago,” said Rob Subbaraman, head of global market research at Nomura Holdings Inc. Covid-19’s situation could also affect market expectations: If the Chinese economy cools down now, others will soon follow. “

A group of 20 finance ministers gathered in Venice on Saturday sounded the alarm over threats to a fragile global recovery, saying new variants of the coronavirus and the erratic pace of the vaccine could undermine a bright view of the world economy. Chinese state media also quoted several analysts on Monday as saying that internal growth in the second quarter will slow due to the sure recovery of the world.

He believes that if China’s recovery slows, plant inflation is likely to peak and commodity prices could moderate further.

“The slowdown in China’s growth should lead to short-term deflationary pressures around the world, especially in demand for the metals and capital goods industry,” said Asia Pacific chief economist Wei Yao Societe Generale SA.

According to Bloomberg Economics, the changing outlook reflects the advanced phase of China’s recovery as growth stabilizes.

Inside, the big puzzle remains why retail sales are still soft because the virus remains under control. Sales are likely to slow again in June, according to Bloomberg Economics, which was weighed down by controls to monitor occasional outbreaks of the virus.

Even with the support provided by the PBOC to small and medium-sized enterprises, the disciplined views promoted by the authorities since the beginning of the crisis show that there is no significant setback.

The RRR reduction was partly due to “expectations management” ahead of economic data for the second quarter of this week, said Bruce Pang, head of macro-strategy and strategy research at China Renaissance Securities Hong Kong.

“It also provides more room for policy in the future, as the momentum for economic recovery has slowed.”