The economic prospects for China improved but there are still latent risks: on the one hand, the International Monetary Fund (IMF) forecasts growth of 5.4% for this year; while the imports The Asian country showed an unexpected increase in October imports while prices contracted. exports, which puts the opposition of the improvement in internal demand in a tightrope. How can this affect Uruguay?
He IMF completed his mission in China and published the final report in which it raised its forecast for growth of the Gross Domestic Product (GDP) for the Asian giant from 5% to 5.4% in 2023, based on the push for increased consumption and the recent measures announced in Beijing.
This scenario shows signs of a expansion greater than expected —especially in the third quarter—, signs of “a strong rebound after the reopening of domestic demand, particularly consumption,” according to the first deputy managing director of the IMF, Gita Gopinath.
Likewise, the international organization also improved the forecast for 2024, which went from a growth of 4.2% to being able to reach 4.6%. However, they also pointed out that it is still a deceleration, product of weaknesses in the real estate market and lower external demand.
Concern in the export-import dynamic
Along with the IMF’s best projections, information was released that raises alarm bells about the Chinese economy: in October, imports grew unexpectedly—a 3% against the expectation of a 4.8% reduction—; while exports contracted at a faster rate—they fell 6.4% in interannual terms.
“The figures contrast with market expectations. Poor export data may affect market confidence as we expected the export supply chain to recover,” he said. Zhou Hao, economist Guotai Junan International.
While “the significant improvement in imports may come from the increase in domestic demandHowever, official data shows that both new export and import orders contracted for the eighth consecutive month in October, suggesting manufacturers are struggling to find buyers in the market. abroad and ask for fewer components.
This mix of signals points to the risks that the Chinese economy still faces, which the Asian government is trying to face without yet putting into play the necessary structural reforms to definitively address the problems on the table. The general conclusion is that the recovery observed is still fragile and uneven.
What impact can this have in Uruguay?
China is still an important business partner of Uruguay Although it has been removed from first place in terms of exports for several months now, due to the lower demand for national products by the Asian government.
In this sense, the growth in chinese imports It can be a good sign for local export sectors, as it means that there is a reactivation of demand for goods from other countries – among them, Uruguay. Considering that Uruguayan loans in the Asian country have fallen across the board during the year—with some recent rebounds that clearly correspond with this improvement in Chinese demand—this scenario can definitely mean improvements in the local economy.
The same with the projections of a growth in GDP Chinese: The better the economy of trading partners, the more likely it is that exchanges will be on the right track.
However, we will also have to take into account the risks that experts still point out, as well as the fact that, although forecasts improved, the economy of China will slow down next year. This will also have an impact on the macroeconomic indicators local, mostly in the trade balance with Beijing.
Source: Ambito
