Business: China GDP jumps record 18.3%
BUT MISSES FORECAST WITH POST-COVID RECOVERY SEEN LOSING STEAM
China’s economic recovery quickened sharply in the first quarter to record growth of 18.3 per cent from last year’s deep coronavirus slump, propelled by stronger demand at home and abroad and continued government support for smaller firms.
But the brisk expansion, heavily skewed by the plunge in activity a year earlier, is expected to moderate later this year as the government turns its attention to reining in financial risks in overheating parts of the economy.
While the jump in gross domestic product (GDP) undershot the 19 per cent forecast by economists in a Reuters poll, the official data showed it was the fastest growth since quarterly records began in 1992 and up from 6.5 per cent in the fourth quarter last year.
Rebound levels off
“The upshot is that with the economy already above its previrus trend and policy support being withdrawn, China’s postCovid rebound is levelling off,” said Julian Evans-Pritchard, senior china economist at Capital Economics.
“We expect quarter-onquarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds, pulling activity back towards trend,” Evans-Pritchard said.
Aided by strict virus containment measures and emergency relief for businesses, the economy has recovered from a steep 6.8 per cent slump in the first three months of 2020.
China’s rebound has been led by exports as factories raced to fill overseas orders and more recently a steady pickup in consumption as shoppers returned to restaurants, malls and car dealerships.
Slowdown expected
Retail sales increased 34.2 per cent year-on-year in March, beating a 28.0 per cent gain expected by analysts and stronger than the 33.8 per cent jump seen in the first two months of the year.
Other data, however, showed a moderation in expansion with quarter-on-quarter growth slowing to 0.6 per cent in January-March from a revised 3.2 per cent in the previous quarter, missing expectations for a 1.5 per cent increase.