(ATF) China’s economy grew at a record pace in the first quarter, official data showed on Friday, expanding 18.3% from a year earlier.
The growth in gross domestic product (GDP) was slower than the 19% forecast by economists in a Reuters poll, and followed 6.5% growth in the fourth quarter last year.
It was the strongest growth since at least 1992 when official quarterly records started, although the headline number is exaggerated by the slump last year associated with the pandemic.
“This tells us little about the economy’s current momentum, however, since it reflects a much weaker base for comparison from last year’s Covid-19 downturn,” said Julian Evans-Pritchard, chief China economist at Capital Economics.
China’s economy has largely recovered from last year’s Covid-induced paralysis, fuelled by global vaccination progress, resilient exports and government stimulus.
The world’s second-largest economy is expected to grow 8.6% this year, according to a Reuters poll, following a 2.3% rise last year, which was its weakest in 44 years but still made China the only major economy to avoid contraction.
DOUBTS OVER SUSTAINABILITY
However, there are doubts China can sustain the rapid pace of expansion as the low comparison base seen in the first half of last year fades.
“The upshot is that with the economy already above its pre-virus trend and policy support being withdrawn, China’s post-Covid-19 rebound is levelling off,” said Evans-Pritchard.
“We expect quarter-on-quarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds, pulling activity back towards trend,” he added.
On a quarter-on-quarter basis, GDP rose 0.6% in January-March, the National Bureau of Statistics said, compared with expectations for a 1.5% rise and a revised 3.2% gain in the previous quarter.
China’s economic rebound likely quickened sharply in the first quarter from a coronavirus-induced slump earlier last year, propelled by stronger demand at home and abroad and continued government support for smaller firms.
March industrial output rose 17% from a year earlier, slowing from a 35% rise in the first two months. March retail sales growth is expected to cool to 28% from 33.8% in January-February.
Retail sales rose 34.2% year-on-year in March. “Growth rates were high, even after accounting for low hurdles seen last year, highlighting the very strong consumption levels in China,” said Mitsuko Miyasako, equity analyst at Jefferies in Tokyo.
Real estate investment in China rose 25.6% in March, with property sales by floor area growing 63.8% year-on-year, down from a 104.9% rise in the first two months of the year.
With reporting by Reuters
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