A Asian Trade poll released on Friday showed that China’s export growth likely slowed even more in October as global demand continued to weaken. At the same time, imports remained slow as domestic growth slowed.
The median prediction of 20 economists in the poll is that exports rose 4.3% from a year ago to last month. This is slower than the 5.7% growth rate in September. That would be the slowest growth since April, when the world’s second-largest economy was shaken by COVID lockdowns in Shanghai.
“The lacklustre outlook for global supply chains is not good news for China’s exports,” said Raymond Yeung, chief China economist at ANZ.
“As the economies of the U.S. and Europe slow, demand for electronic parts may stay low into next year,” he said.
Monday is when the trade data will be made public.
In the first half of 2022, China’s exports did better than expected and were one of the few bright spots in its struggling economy. However, global interest rate hikes, rising inflation, and disruptions from the Russia-Ukraine war have all worked together to slow down global demand.
An official survey showed that factory activity fell more than expected in October. Fewer export orders and strict COVID-19 limits were to blame for this. Even though the yuan is getting weaker, which should make Chinese goods more competitive as we head into the most important shopping season of the year, orders are falling.
Barclays (LON:BARC) economists said in a note that high-frequency data shows that the economy will slow down even more in the fourth quarter. In the first 10 days of October, the number of containers moving through major ports fell by 9%.
“Global demand is slowing, and a global recession is likely. We also see that export orders that would normally go to China are being sent to other emerging market economies.
Barclays thinks that China’s exports could drop by 2-5% in 2023. This is because last year was a good year to compare to.
On the other hand, imports are expected to stay very low because COVID-19 containment measures will keep domestic consumption low.
The poll showed that imports were expected to have gone up just 0.1% from the same time last year. This is less than the 0.3% increase in September.
Analysts at Goldman Sachs (NYSE:GS) said that lower oil prices would also slow the growth of imports as a whole.
In October, South Korea’s exports, which are a good predictor of China’s imports, fell the most in 26 months. Its biggest market, China, saw a 15.7% drop in exports.
Due to the weak trade predictions, it was thought that China’s trade surplus would grow from 84.74 billion in September to 95.95 billion in December.
Thursday, China had the most COVID-19 cases in two and a half months. This shows that the restrictions are still having an effect. Goldman Sachs says that as of Friday, around 52% of the national GDP came from cities with high- or medium-risk neighbourhoods.
The poll was put together by Anant Chandak. Ellen Zhang and Ryan Woo did the reporting, and Kim Coghill did the editing.