China’s first-quarter Gross Domestic Product (GDP) surged strongly as the global partners faced slowing growth as central banks hiked interest rates to curb inflation.
GDP increased by 4.5% in the first quarter, as announced on Tuesday by China’s National Bureau of Statistics. This increase is the strongest growth since the previous year’s first quarter when China’s economy increased by 4.8% – and better than the 4% predicted in a Reuters poll. Quarter after quarter, the economy grew by 2.2%.
China’s growth is in the spotlight as it reopens after lifting most of the tough Covid restrictions for nearly three years. The economy increased by 2.9% in the fourth quarter of 2022.
Retail sales increased by 10.6% in March as online sales of physical goods increased. Industrial production rose by 3.9%, slightly below Reuters’ forecast of 4%.
Year-to-date capital investment grew by 5.1% compared to the same period of the prior year, which was lower than anticipated due to a shortfall in infrastructure investment and manufacturing activity. At the same time, real estate investments have continued to decline.
The economy increased by 3% in 2022, less than Beijing’s formal target of around 5.5% fixed last year in March. For 2023, the government set a moderate growth target of “around 5%” last month.
China’s economy should get another boost from the government later in the year, Helen Zhu, executive director of NF Trinity, told CNBC’s ‘Street Signs Asia’ quickly after the data was released.
“I think we will beat the 5% target in the second quarter, and hopefully, there will be much stimulus going into the third quarter,” she said.
She added that the latest figures should allay skepticism about China’s ability to meet its full-year growth target for 2023, prompting corresponding upward revision to GDP forecasts. And that the numbers are a lot higher than expected, and she thinks it’s a really good start to the year.
Iris Pang, ING’s Chief China Economist, has predicted that the Chinese Government will put forward additional stimulus measures in order to increase investment in infrastructure and lift consumer spending.
China’s service sector overview
China’s services sector saw a 5.4% year-on-year growth in the first quarter after the implementation of its zero-COVID-19 policy.
According to government data, the services output index increased by 9.2%, led by housing, food, and information technology services in March.