HomeEconomyChina recovery picks up speed, global headwinds point to bumpy outlook Economy China recovery picks up speed, global headwinds point to bumpy outlook By inew April 18, 2023 0 51 views Share FacebookTwitterPinterestWhatsApp Dollar /CNY -0.% Add/Remove from Watchlist Add to watch list Add Job Location successfully added to: Please name your portfolio type: purchase Sell date: quantity: price Point value: Leverage: 1:11: 1: 1: By Kevin Yao and Joe Cash BEIJING (Reuters) – China’s economy grew faster than expected in the first quarter as the end of strict COVID-19 containment measures lifted businesses and consumers from the crippling pandemic ravaged by the virus, even as headwinds from a slowing global economy point to a bumpy road ahead. Global monetary policy tightening that has lasted for more than a year to curb red-hot inflation has weakened world economic growth and led to economic growth in countries including China. Many countries rely on domestic demand to fuel growth momentum and present challenges for policymakers seeking post-COVID stability. Data released by the National Bureau of Statistics on Tuesday showed that the gross domestic product in the first three months of this year grew by 4.5% year-on-year, faster than the previous quarter 2.9%. It beat analysts’ forecasts for a 4.0% expansion and marked the strongest growth in a year. Investors have been closely watching first-quarter data for clues on the strength of the economy after Beijing lifted COVID restrictions and eased restrictions in December. The economy recovers after a three-year blow to tech companies and real estate. Last year’s GDP growth slumped to one of the worst in nearly half a century due to COVID containment measures. “Economic recovery on track, bright spot is consumption, which is strengthening as household confidence improves,” Pinpoint said Zhiwei Zhang, chief economist at Asset Management. “Strong export growth in March may also have helped boost GDP growth in the first quarter.” Chinese policy makers have committed Increase support for the US dollar trillion economy to keep unemployment in check, but as companies grapple with debt risks, structural problems and global recession fears, they face limited wiggle room. China’s rebound has so far remained uneven, as growth that used to be driven by investment is now challenged by growth that relies on consumption. Spending on consumption, services and infrastructure picked up, but factory output lagged in the face of weak global growth, while slower prices and a surge in bank deposits sparked a Doubts about demand. Data this week showed China’s exports unexpectedly surged in March, but analysts warned the improvement partly reflected last year’s COVID- Interrupted. “Overall, it was a good set of data for China’s first quarter, which puts them on track to Achieve this year’s growth target of around 5 percent,” said City Index senior market analyst Matt Simpson. On a quarterly basis, GDP rose 2.2% in January-March, in line with analysts’ expectations and up from a revised 0.6% in 2019 increase in the previous quarter. Asian stocks pared losses on Tuesday after the data, Hong Kong Hang Seng fell 0.4% in early trading while China’s blue-chip CSI 09 index rose 0.3%. Policy Support The National Central Bank is on Zhou said that it will maintain sufficient liquidity, stabilize growth and employment, and focus on expanding demand. On Monday, the central bank provided liquidity support to banks through the Medium-Term Lending Facility, but left interest rates on such loans unchanged, suggesting that the authorities are not Not overly concerned about near-term growth prospects. This is after the cut in bank reserve requirements in March. The government has not taken big steps to stimulate consumption and still relies heavily on infrastructure spending to stimulate investment and economic growth. The government has raised its annual budget deficit target to 3 percent of GDP this year and allowed local governments to issue more special-purpose bonds to finance large-scale projects. “In short, based on this GDP report, we see no immediate need for a massive stimulus to the economy,” ING Greater China chief economist Iris Pang, said in a note. Mo actual growth target Analysis of Reuters survey The analyst expects growth in China to accelerate to 5.4% in from 3.0% last year. This was badly missed in 19 Target. Separate data on March activity on Tuesday also showed retail sales growth accelerated to . 6%, exceeding expectations and hitting a new high in nearly two years, while factory output growth also accelerated, but slightly below expectations. sharp rebound from a low year-ago base as consumers borne the brunt of COVID restrictions early on, helping Consumption Growth 50 China’s Jan-March infrastructure investment up 8.8% YoY – outpaced the 5.1% rise in overall fixed asset investment, while real estate investment fell 5.8%. 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