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The week starts with concerning news from China.
The country’s GDP growth in the second quarter was only 6.3%, falling short of the expected 7.1% year-on-year growth. In the first half of the year, GDP increased by 5.5%.
The retail sector showed a significant improvement, with a growth rate of 8.2% compared to just 0.7% in the same period last year, whereas industrial production saw a modest increase of 3.8%, with a meager growth of 0.4%.
The youth unemployment rate reached a record high of 21.3% for those aged 16 to 24, while the overall unemployment rate stood at 5.3% at the end of June.
It is now becoming apparent that achieving the 5% growth target is becoming increasingly problematic as a further slowdown may continue in the coming months.
On the other hand, if the situation does not improve in the near future, which is unlikely, the authorities will be forced to take additional measures to stimulate the economy.
However, China is not the only country facing challenges.
In the United States, interest payments over the past nine months amounted to $652 billion, a 25% increase compared to the previous year due to a contractionary monetary policy.
The US budget deficit from October to June reached nearly $1.4 trillion, a staggering 170% increase compared to last year.
Additionally, the Federal Reserve is expected to raise interest rates again at its upcoming meeting on July 26, which may lead to an increase in bankruptcies.
For the record, there were 54 company bankruptcy filings in June. Yes, this data is lower than in May but still significantly higher than most months in 2021 and 2022.
Overall, there were 2,973 Chapter 11 bankruptcy filings in the first half of the year, and the number of individual bankruptcies under Chapter 13 increased by 23%.
To gain further insights into the prospects, investors will closely monitor the economic calendar, including the ISM report on manufacturing activity and data on services demand, industrial production, and housing starts.
These indicators will provide valuable information about the overall economic landscape.
