Lewis Bentley Group says PBoC may need to resort to more stimulus after China’s Q2 grows at weakest pace since 1992.
China’s GDP growth slowed to 6.2% during the period from April to June, down from 6.4% in the previous quarter and the lowest growth seen in 27 years.
Lewis Bentley Group analysts blame the prolonged trade war with the US and a global slowdown for the disappointing growth. The uncertainty caused by China’s trade war with the US is a factor that will likely persist in the coming months. Lewis Bentley Group analysts believe there is little chance of the world’s two largest economies finding their way to a trade agreement that would put an end to the trade war in the coming months.
Lewis Bentley Group analysts say China’s economy will continue to face significant challenges in the second half of this year and although the People’s Bank of China has already implemented stimulus measures, additional stimulus will be necessary to help the economy cope with the downward pressure.
Meanwhile, the US Federal Reserve has indicated that it will likely reduce borrowing costs before the end of this year. After a decade of robust expansion the US economy is showing signs of slowing as it too is impacted by uncertainty surrounding the trade war with China.