China’s leisure spending remains drag on growth amid recovery

Bloomberg | Updated on October 20, 2020

While consumption improved in the quarter to September, spending hasn’t returned to pre-Covid-19 levels

China’s hotels and restaurants, one of the hardest-hit sectors of the economy during the coronavirus pandemic, remained a significant drag on growth in the third quarter even as the recovery gained momentum.

Output in the sector fell 5.1 per cent from a year ago, the statistics bureau said on Tuesday in a supplemental report on gross domestic product. That was smaller than the 18 per cent decline in the second quarter. For the first nine months of the year, the sector’s output was down 19.1 per cent compared to the same period in 2019.

Gross domestic product data released on Monday showed consumption in China continued to improve in September as virus-related restrictions eased further and consumer confidence picked up. However, spending hasn’t returned to pre-Covid-19 levels, with retail sales in the first nine months of the year down about 7 per cent compared with the same period last year.

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Leasing and commercial services was the worst performer last quarter, declining 6.9 per cent from a year ago. The information technology sector continued to outperform, rising 18.8 per cent.

Growth in the construction sector remained solid, rising 8.1 per cent in the quarter from a year ago, reflecting strong credit support from the government to boost infrastructure and a buoyant property market.

Published on October 20, 2020

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