The inflation in China grew 0.3% year-on-year in May, according to the latest data published by the National Statistics Office of the Asian country. In this way, the figure of the previous month was repeated. What could this mean for Uruguay?
The consumer price index in China showed a new increase of 0.3%, and not only repeated April results, but also marked the fourth consecutive month of increase. In a stagnant economy that had shown signs of deflation, if not good news, at least it implies some relief at the doors of a recovery.
In any case, analysts warn that it is necessary to further promote demand to accelerate improvements after the delayed economic effects that the coronavirus pandemic Covid-19 generated in the second world power. Furthermore, the inflation announced this Wednesday was slightly below the forecast of the specialists consulted by the Bloomberg agency, which pointed to 0.4%.
On the other hand, the producer price index, which measures the inflation of goods when leaving the factoryremained on the deflationary path that has persisted since the end of 2022. This indicator registered a fall of 1.4%, although more moderate compared to the 2.5% decline in April.
The leaders of China They have been trying to boost consumption for some time, weakened among other reasons by the real estate crisis and the high youth unemployment.
The authorities’ recent decisions to reduce pressure on the real estate sector are “a step in the right direction,” the president and chief economist of the consultancy told the AFP agency. Pinpoint Asset Management, Zhiwei Zhang. But “to promote the domestic demand more effectively, a broader and more proactive policy may be necessary,” he added.
Good news for Uruguay?
The chinese economy It has been stumbling for several months after the crisis as a result of the restrictions due to the Covid-19 pandemic hit the Asian country hard.
Last year was marked, mainly, by the deflation and the stagnation. This certainly impacted all Chinese trade, and also the exchanges it maintains with Uruguay. Between the accumulated stock and lower demand while budgetary efforts were aimed at boosting the domestic market, China It abandoned its historic first place on the list of destinations for local exports and made political authorities and business chambers concerned about the effect on national accounts.
But at the end of 2023 a very slow recovery began that managed to improve its prospects and close the year with a growth of 5.2% of the Gross Domestic Product (GDP)in line with expectations.
Now, the four consecutive months of increase in inflation They are in the direction of recovery, since they account for greater consumption that exerts inflationary pressure on prices. The coincidence is that demand must be made even more dynamic, which can mean two things for the country: that, effectively, China buy more; or, on the contrary, directs its efforts, again, towards its own market.
Added to this is the fact that experts and analysts from around the world warn of the eventual exhaustion of this Chinese recovery and the deterioration of growth prospects. This could occur, depending on the International Monetary Fund (IMF)due to the lack of a comprehensive response to the real estate sector in crisis.
Source: Ambito
