As Chinese economy contracts, G20 GDP falls 0.4 percent in Q2 2022: OECD

Private final consumption expenditure rose a mere 1.8 percent year-on-year in January-March, while gross fixed capital formation - a proxy for investments was up 5.1 percent.

The gross domestic product (GDP) of G20 economies fell 0.4 percent quarter-on-quarter (q-o-q) in Q2 2022, reflecting the sharp contraction in the Chinese economy, show provisional estimates released by the Organisation for Economic Cooperation and Development (OECD).

In contrast, the GDP of OECD economies, which doesn’t include China, grew by 0.4 percent over the same period.

“The slowdown in the G20 area in Q2 2022 mainly reflected the sharp contraction in China, where GDP fell by 2.6% quarter-on-quarter after rising by 1.4% in Q1 2022. This contraction reflected the lockdowns that were put in place to contain COVID-19 outbreaks,” OECD said in a press release.

China’s strict zero-covid policy has resulted in rolling lockdowns in several parts of the country as fresh outbreaks are reported, disrupting the economy.

Despite an overall contraction in the GDP of G20 economies, Australia, Brazil, Italy, Japan, Korea and Turkey recorded stronger sequential growth in the second quarter. Turkey’s GDP grew by 2.1 percent in the second quarter of 2022, supported by an increase in private consumption, compared to the 0.7 percent growth in the first quarter.

India’s GDP fell 1.4 percent on a quarterly basis over the same period. According to OECD, this was mainly due to a decline in government spending and net trade, or the difference between exports and imports. India’s GDP growth had contracted in the first quarter of the year as well.

However, when compared to a year earlier, India’s GDP grew by 3.6 percent and 13.5 percent in Q1 and Q2 2022, respectively. In fact, India’s Q2 year-on-year growth rate is the highest amongst G20 economies.

Apart from China and India, quarterly GDP contracted in South Africa, the UK and the US as well. In South Africa, flooding in one of its key manufacturing provinces undid the economic recovery of the two previous quarters. The 0.7 percent fall in its GDP growth in Q2 2022 has taken the country’s economy below pre-pandemic levels.

The G20 consists of 19 countries including Australia, China, France, Germany, India, Italy, Japan, South Korea, Russia, Saudi Arabia, South Africa, the UK, and the US, along with the European Union.

Collectively, the group accounts for 85 percent of global GDP, as well as 75 percent of international trade and two-thirds of the world population. India is slated to assume the presidency of the grouping at the end of this year.