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China’s GDP rises despite virus outbreaks

China COVID-19
The Chinese capital began mass testing people in one of its 16 districts where most of the new cases have been found. Photo: Getty
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China’s economy grew at a faster than expected clip in the first quarter, official data shows, expanding 4.8 per cent year-on-year, but the risk of a sharp slowdown over coming months has risen as sweeping COVID-19 curbs and the Ukraine war take a toll.

Gross domestic product (GDP) had been forecast to expand 4.4 per cent from a year earlier, according to a Reuters poll of analysts, picking up from 4.0 per cent in the fourth quarter last year.

On a quarter-on-quarter basis, GDP rose 1.3 per cent in January-March, compared with expectations for a 0.6 per cent rise and a revised 1.5 per cent gain in the previous quarter.

Heightened global risks from the war in Ukraine, widespread COVID-19 lockdowns and a weak property market are putting a choke hold on the world’s second-largest economy, and some economists say the risks of a recession are rising.

The government’s determination to stop the spread of record COVID-19 cases has clogged highways and ports, stranded workers and shut countless factories – disruptions that are rippling through global supply chains for goods ranging from electric vehicles to iPhones.

Late on Friday, the People’s Bank of China announced it would cut the amount of cash that banks must hold as reserves for the first time this year, releasing about 530 billion yuan ($US83.25 billion) in long-term liquidity to cushion a sharp slowdown in economic growth.

China has targeted slower economic growth of around 5.5 per cent this year as headwinds gather, but some analysts say that may now be tough to achieve without more aggressive stimulus measures.

China’s industrial output rose 5.0 per cent in March from a year earlier, down from a 7.5 per cent increase seen in the first two months of the year, data from the National Bureau of Statistics also showed on Monday.

The reading was stronger than a 4.5 per cent increase predicted by analysts in a Reuters poll.

Retail sales in March contracted 3.5 per cent year-on-year amid increasing COVID-19 outbreaks and lockdowns, after increasing 6.7 per cent in January and February. The figure was well below expectations for a 1.6 per cent decrease.

Fixed asset investment increased 9.3 per cent year-on-year in the first quarter, compared with the 8.5 per cent increase tipped by the Reuters poll but down from 12.2 per cent growth in the first two months.