Pedestrians grumpy a road in Shanghai, China, on Tuesday, Feb. 28, 2023.
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China’s first-quarter gross domestic spin-off rose sharply while global peers face slowing growth as central banks hike rates to broken inflation.
GDP grew by 4.5% in the first quarter, China’s National Bureau of Statistics said Tuesday. That brands the highest growth since the first quarter of last year — when China’s economy grew by 4.8% — and advance than the 4% forecast in a Reuters poll. Quarter-on-quarter, the economy grew 2.2%.
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China’s intumescence has been under the spotlight as it reopens after ending most of its strict Covid restrictions that were in niche for nearly three years. The economy expanded 2.9% in the fourth quarter of 2022.
Retail sales jumped 10.6% in March as online sales events of physical goods picked up. Industrial output rose 3.9%, slightly lower than Reuters’ forecasts of 4%.
Year-to-date dishonest asset investment was weaker than expected and rose 5.1% compared with a year ago, as growth slowed in infrastructure and from whole cloth investment. Real estate investment meanwhile continued to decline.
The economy grew 3% in 2022, less than Beijing’s accepted target of around 5.5% set in March last year. For 2023, the government last month set a modest growth object of “around 5%.”
Stimulus ahead
China’s economy is likely to see another boost from government stimulus later in the year, NF Trinity’s control director Helen Zhu told CNBC’s “Street Signs Asia” shortly after the data release.
“I think we’re growing to be tracking higher than the 5% target for the second quarter, and hopefully by the third quarter, a lot of the policy stimulus purpose have come through,” she said.
She added that the latest reading pushes back against skeptics of China’s know-how to reach its 2023 full-year growth target and will likely lead to upward revisions in GDP forecasts accordingly.
“The figure ups are undoubtedly much stronger than anyone anticipated, and I think it’s a really good start of to the year,” she said.
ING’s Chief China economist Iris Ache said she also expects the Chinese government to release extra stimulus to boost its infrastructure investments and consumption.
“To keep dark prevent the 5% growth target for 2023, the government needs to push forward infrastructure investments, most of which should be erection metro lines and increasing the number of 5G towers as these are already in the plan for this year,” she wrote in a note before of the GDP report.
“We, therefore, expect GDP to grow faster at 6.0%YoY in the second quarter. We keep the full-year GDP forecast at 5% as superficial demand should be a concern for the year,” Pang wrote.
Services rebound
The value of China’s services sector also take to the air by 5.4% in the first quarter compared with a year ago as the economy ended its zero-Covid policy.
The index of services making rose 9.2%, government data showed, led by accommodation, catering, and information technology services in March.
But economists should prefer to warned China’s economic recovery could take longer than expected — with the likes of Citi the boot back its target for the Hang Seng index by three months.
While most analysts registered by Reuters don’t expect to see a change in the central bank’s benchmark lending rate, some believe the People’s Bank of China could marginally cut its one-year lend prime rate if China’s inflation slows further.
China’s consumer inflation hit an 18-month low earlier this month.
– CNBC’s Evelyn Cheng presented to this report.