In another sign that China’s economy has slowed, inflation is at a 29-month low. The country posted a June consumer price increase of only 2.2%. Inflation was only recently a major concern in the People’s Republic, when price increase for commodities that included food in particular were rising in double digits.
The lack of inflation combined with a sharp drop in the country’s purchasing manufacturing index mean the forecasts of only 7% GDP growth in the second quarter are likely to be correct. If the present pattern persists, mostly because of export trouble due to shaken economies in Europe, gross domestic product could drop to a low not posted in the past decade.
“Inflation is dead and growth is by far the main concern in Asia,” said Tim Condon, chief Asia economist at ING Financial Markets in Singapore, according to Bloomberg. Based on his assessment, some of the region’s economies actually may be in retreat.
Douglas A. McIntyre