China’s economy achieved its most rapid quarterly expansion for two years during the final three months of 2020, posting growth of 6.5% during the period. Over 2020, the country’s economy expanded by 2.3%.
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- China posted strong export growth in December
- Retail sales weakened
- The RBI expects India’s GDP growth to turn positive in fiscal Q3
China’s economy achieved its most rapid quarterly expansion for two years during the final three months of 2020, posting growth of 6.5% during the period. Over 2020, the country’s economy expanded by 2.3%. The International Monetary Fund (IMF) expects China’s economy to grow by 8.1% this year and by 5.6% next year, considerably ahead of its forecast for global economic growth of 5.5% in 2021 and 4.2% in 2022. According to S&P Global Platts, China’s economic recovery is likely to boost global demand for oil.
‘”Build an open world economy … take down barriers”’ (Xi Jinping
In a speech to the World Economic Forum (WEF), President Xi Jinping urged world leaders to “build an open world economy … discard discriminatory and exclusionary standards … and take down barriers to trade, investment and technological exchanges”.
Despite a strengthening yuan, China posted robust export growth during December. Exports rose by 18.1% year on year during the month; meanwhile, imports picked up, rising at an annualised rate of 6.5%. Over 2020 as a whole, exports increased by 3.6% while imports declined by 1.1%. Industrial output grew at an annualised rate of 7.3% during December compared with 7% in November. However, retail sales showed signs of a slowdown: having grown by 5% in November, they rose by only 4.6% year on year in December. The Shanghai Composite Index rose by 0.3% over January.
India’s economy is continuing to recover, according to the country’s central bank, which expects economic growth to turn positive in the third quarter of the fiscal year. The Reserve Bank of India (RBI) highlighted signs of economic recovery in December, including a rise in manufacturing activity, and an increase in demand for bank credit. The RBI observed: “Recent shifts in the macroeconomic landscape have brightened the outlook, with GDP in striking distance of attaining positive territory and inflation easing closer to the target”. The central bank also hailed India’s success in avoiding a second wave of Covid-19 infections, commenting: “Since mid-September, India has “bent it like Beckham”. Elsewhere, the IMF upgraded its forecast for India’s economic growth this year from 8.8% to 11.5%, citing a stronger-than-expected post-lockdown rebound.
In contrast, credit ratings agency Fitch warned that, although India is in a recovery phase, supported by vaccine rollouts, the country’s economy is set to suffer “lasting damage” from the pandemic. The CNX Nifty Index fell by 2.5% during January.
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