Asia Minute: 2 largest economies are moving at different speeds
Japan and China started the week with economic news reflecting two different experiences with the pandemic and with consumers.
In Japan, the economy grew by more than 2% in the second quarter. That’s up from flat growth from January to March — the month when the government lifted some pandemic restrictions.
The main driver was a rise in consumer spending — from restaurants and retail to domestic travel.
There’s still caution. Overseas travel remains subdued and COVID case counts have jumped sharply in recent weeks.
Last month the International Monetary Fund and Japan’s own government cut expectations for the country’s economic growth — in part because of China’s COVID lockdowns and their impact on supply chains.
In China on Monday, July’s consumer spending and industrial production both came in short of economists’ expectations — further evidence of a slowing economy.
The central bank reacted quickly — cutting its medium-term interest rate for the first time since January — taking financial markets by surprise.
China’s government is maintaining its “zero-COVID” policy — still locking down areas that have confirmed cases.
The IMF has also recently slashed its economic projections for China — forecasting the slowest growth for the country in more than 40 years.