The NBS released Q1 GDP figures yesterday, surprisingly up (1.3% q/q vs. 0.6% Bloomberg consensus, not annualized; 4.8% y/y vs. 4.4%).
Figure 1: 100 million RMB real GDP in 2015, not seasonally adjusted (blue, left log scale), and IMF January forecast world economic outlook (blue square) and index, 2019Q1=1 (red, right log scale), and forecast from January world economic outlook (red square). The index accumulated from the reported growth rate.Source: National Bureau of Statistics and International Monetary Fund world economic outlook (January 2022)and the authors’ calculations.
Industrial production in China also unexpectedly rose in March (5.0% yoy vs. 4.5% consensus) and fixed asset investment (9.3% yoy vs. 8.5% consensus). However, retail sales fell 3.5% year-on-year, compared with a 1.65% decline in the consensus, reflecting the recent Covid shutdowns. (For the latter, see here impact on production).
From Reuters:
Final consumption accounted for 69.4% of China’s first-quarter GDP growth, down from 85.3% in the fourth quarter of 2021, according to the National Bureau of Statistics.
“Even if GDP growth in the first quarter was higher than the 4.0% growth in the fourth quarter, it is still far from China’s annual target of 5.5%. Growth in March was severely affected by anti-virus curbs,” said Wang Jun, chief economist at Zhongyuan Bank. Service sector consumption has been hit hard.
“The pressure is even greater in the second quarter of this year, and the extent to which the economic momentum declines depends on whether China will flexibly adjust its anti-epidemic measures and increase its macro policy support,” Wang Yi said.
The real estate sector continues to threaten overall growth.
Home sales by value fell 26.17% year-on-year in March, the biggest drop since January to February 2020, according to Reuters calculations, indicating a deepening slump in the housing market.
As mentioned in this article, I put aside questions about the accuracy of the official series postal (Regarding the numbers for the third quarter).You can see the Fernald, Hsu and Spiegel CCAT series until 2021Q4 here (Which tracking shows a slightly lower growth rate than the official 4Q growth rate).
The International Monetary Fund will publish its April 2022 World Economic Outlook forecasts tomorrow. Watch to see revisions!
