China’s National People’s Congress announced that it would not set an economic growth target for the country this year as it addresses the impact of the coronavirus pandemic.
- China intends to impose national security laws on Hong Kong
- Brazil’s economy contracted at its sharpest rate since 2015
- India’s central bank cut its key interest rate
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China’s National People’s Congress (NPC) announced that it would not set an economic growth target for the country this year as it addresses the impact of the coronavirus pandemic. Premier Li Keqiang said: “Our country will face some factors in its development that are difficult to predict due to the great uncertainty regarding the COVID-19 pandemic and the world economic and trade environment”. China’s economy contracted by 6.8% during the first quarter.
“Brazil’s GDP is expected to contract more severely in the second quarter”
China also revealed controversial plans to impose national security laws upon Hong Kong that are set to undermine the territory’s special economic status. The announcement triggered criticism from other countries, including the US, where the Senate passed legislation that will compel US-listed Chinese companies to delist if they fail to comply with US auditing standards.
China’s exports rose for the first time in 2020 during April, posting an annualised increase of 3.5%. However, imports dropped by 14.2% year on year in April, having fallen by only 0.9% in March. Over May, the Shanghai Composite Index fell by 0.3%.
Brazil’s economy shrank by 1.5% quarter on quarter during the first three months of the year. This was Brazil’s biggest contraction since the second quarter of 2015, when it contracted by 2.1%, and the country’s statistical agency calculates that, as a result, GDP is at a similar level to the second quarter of 2012. Household consumption fell by 2% as the country reacted to the coronavirus, representing its most substantial decline since 2001. Looking ahead, Brazil’s GDP is expected to contract more severely in the second quarter as the country’s lockdown takes effect on growth.
Brazil’s central bank cut its key Selic rate by 0.75 percentage points to 3%. The monetary policy committee – known as the Copom – said it would reduce rates again in June by the same amount if necessary. The Bovespa Index rose by 8.6% during May.
The Reserve Bank of India (RBI) cut its key interest rate by 40 basis points to 4% in May, and also extended a moratorium on loans from three to six months. Governor Shaktikanta Das warned that India’s economy is likely to contract in the 2020/21 fiscal year. Looking ahead, higher food prices are set to drive up inflation, but the RBI believes the outlook for growth poses the principle risk. Over May, the CNX Nifty Index fell by 2.8%.
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