China’s economy grew by a record 18.3% year-on-year in the first quarter of this year. This growth rate reflects the fact that China’s economy has recovered after bottoming out in early 2020 due to the new crown epidemic. However, this growth figure masks a sharp slowdown in growth due to base effects.
China’s gross domestic product (GDP) grew at a much higher year-over-year rate in the first quarter of this year than the 6.5% growth rate in the fourth quarter of last year. But the figure was actually slightly lower than economists had previously expected. A Reuters poll showed economists predicted a 19 percent year-over-year increase in the first quarter, compared with 19.2 percent expected by economists surveyed by The Wall Street Journal.
The analysis expected GDP growth to jump sharply in the first quarter of this year compared with the same period a year earlier. China’s economy contracted 6.8% year-over-year in the first quarter of last year due to the impact of the new coronavirus outbreak.
Economic research firm Capital Economics was expecting 20.0 percent. Julian Evans-Pritchard, a China economic analyst at the agency, wrote in an analysis sent out Friday, “This tells us little about the current economic momentum, as it is less comparable to last year’s downturn due to the new crown epidemic.”
Evans-Pritchard said it makes more sense to focus on seasonally adjusted quarter-to-quarter changes. On that basis, China’s economy grew at a 0.6 percent rate in the first quarter, compared with an upwardly revised 3.2 percent rate in the fourth quarter of last year.
Economists generally agree that China’s year-over-year GDP growth will almost certainly trend lower in the coming quarters because of a higher comparative base in the year-earlier period.
Evans-Pritchard writes in the analysis, “China’s rebound from the new crown outbreak is leveling off as the economy has surpassed its pre-outbreak trend and removed policy support.”
Capitol Macro expects moderate quarter-to-quarter growth during the year as the recent construction and export boom tapers off and activity resumes its trend.
The economy has recovered from a 6.8% contraction in the first quarter of last year, amid strict viral curbs and emergency bailouts for businesses.
China’s rebound has been led by exports. Consumption has been steadily picking up recently as consumers return to restaurants, shopping centers and car dealerships.
Retail sales rose 34.2% year-over-year in March, beating analysts’ expectations of 28% and up from 33.8% growth in the previous two months.
Other data showed a slower pace of expansion, with quarter-over-quarter growth in the first quarter of this year falling to 0.6% from 3.2% in the fourth quarter of last year, below expectations of 1.5%. factory output rose 14.1% year-over-year in March, up from 35.1 in the January to February period, but below expectations of 17.2% growth.
Recent Comments