One of the historically low growth rates in China was announced for 3Q21 and the periodic performance was 0.2%, while the economy grew by 4.9% compared to the same period of the previous year. During the period in question, growth seems to have slowed down after a short increase in Covid-19 cases, which imposed mobility restrictions in certain regions; however, the current situation shows that a multi-layered effect may come from other factors than Covid, whose worst effect has passed.

 

Economies are currently dealing with a spiral of demand, supply and prices. Therefore, there is a search for sustainability at the point of balance to be created by these factors. With energy costs added to supply chain price pressures, Central banks are facing consumer price inflation that seems less temporary than was thought earlier in the year, as many significant supply shortages, particularly related to semiconductors and shipping capacity, show little signs. While these price hikes increase the pressure on policymakers to remove some of the pandemic-related stimulus, another dimension of concern is that the same shortages are having a greater-than-expected detrimental effect on the economic recovery. Thus, output growth is at risk of slowing sharply as input costs rise.

 

Considering that supply restrictions and the energy crisis have prevailed in the last period; Signs of whether the situation will worsen will be important. In other words, the acceleration of output growth depends on input growth. A slowdown in production will mean delayed supplies that can’t keep up with demand, and increasing price pressures. We need some signs that production restrictions are loosening in Asia.

 

Adding the real estate crisis to the production crisis is another downside risk. The slowdown in credit growth due to the real estate sector crisis will drag down the economic growth balance. One can expect the PBOC to still deduct RRR for eligible loan costs.

Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı

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