domestic demand

Hong Kong’s economy grew 4.3% in Q2 2026 due to strong external trade and resilient domestic demand. The government anticipates continued solid growth, citing vibrant global demand for artificial intelligence-related products.

Beijing has pledged to accelerate spending to support China’s economy. Xi Jinping emphasized the need to 'tap the potential of domestic demand' as part of this effort.

China's Q2 growth slowed to 4.3% year-on-year, the lowest since late 2022, due to the Iran war, weak domestic demand, and a real estate slump. Despite strong exports, declining industrial and real estate investments raise concerns, with analysts warning of an unsustainable economic situation.

China's consumer price growth weakened in June, while producer inflation rose to a near 4-year high. Investors increasingly view China's two-speed growth model, characterized by robust exports and tepid domestic demand, as a long-term economic feature.

China's retail sales fell 0.6% in May, marking their first decline in over three years and missing expectations of flat growth. Fixed-asset investment also contracted more than forecast, indicating weakening domestic demand.

China's economy is gaining momentum from artificial intelligence-related industries, while real estate and domestic demand sectors remain weak. The newsletter highlights AI as a potential driver for broader market growth.

The French economy contracted by 0.1% in the first quarter due to weak domestic demand and a decline in exports.