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Global Stocks Increase After Strong Growth from United States and China

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Stocks around the world have hit a record high as economic data from the United States and China signals a strong recovery from the collapse following the Covid-19 pandemic. The record-high stock numbers can be attributed to massive government stimulus programs and corporate earnings releases that speak to the incredible recovery speed of the world’s two largest economies.

China, in particular, is showing signs of strong recovery with an unprecedented growth rate in their economy. While the Chinese government’s official target for economic growth came in at six percent for the year, first-quarter reports show that the Chinese economy grew by 18.3 percent compared to its value last year at this time. The high number is a result of last year’s decline but still sets China on the path to grow its economy by between 8 and 9 percent by the end of the year.

Further data from China shows that retail sales increased by 34 percent from last year, fixed-asset investments grew by 26 percent in urban areas, and industrial production increased by more than 24 percent. The massive growth in China will contribute to economic recovery around the rest of East Asia and the Pacific.

The strong economic data from China is joined by data from the United States showing similar, albeit less drastic, improvements in the economy. Retail sales in the United States increased to a record-high of 9.8 percent in March, and the economy is set to grow by around six percent by the end of the year. Additionally, unemployment claims fell to their lowest rate since last March, and areas of the economy like entertainment and travel are beginning to make a slow, steady recovery that should continue through the summer.

Despite the strong showings from China and the United States, some economic analysts believe that the rapid growth as part of the recovery from Covid-19 is nearing an end. The Chinese economy only grew by .6 percent compared to the last quarter for 2020 — the slowest rate since the beginning of the pandemic, which saw a severe decline of 9.7 percent from the previous quarter. It is also important to note that the massive 18.3 percent increase is only so high because of the low base numbers from last year that make up part of the reported data. As time moves on and the data falls out of circulation, it will be easier to have a clear picture of the exact strength of the economic recovery from Covid-19.

As momentum from the recovery declines, and as initial surges in the economy slow down as recovery brings economies closer to their pre-pandemic levels, it is likely that economic growth will slow and return to a more typical pace. Many of the high numbers being reported by countries like the United States and China are based on numbers from last year and therefore offer an inflated picture of the actual pace of economic growth during the recovery.

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