China’s Economy Rebounds Faster Than Expected: Q1 GDP Growth Surpasses Analyst Forecasts
China's economy grew by 4.5% year-on-year in the first quarter of 2023, beating analyst forecasts and indicating that the world's second-largest economy is firmly on the path to recovery after the end of Beijing's strict “zero-COVID” policies.[0] The growth rate is higher than the average 3.8% estimate from a recent Caixin survey of economists and also tops the 2.9% GDP growth in the fourth quarter of 2022, when China stuck to its stringent “zero-Covid” policy most of the time.[1]
Retail sales also saw significant growth, jumping by 10.6% in March on a year-over-year basis, which is the largest jump seen since June 2021.[2] The catering service industry played a significant role in driving a 5.8% increase in retail sales for the first quarter.[3] Additionally, industrial production expanded by 3.9% on a yearly basis, compared to analysts' estimate of 7.4%.[4]
China's economy is rebounding on multiple fronts, according to data released by the country's National Bureau of Statistics. Last month, gross domestic product shot up, retail sales boomed, industrial output rose, and fixed asset investment climbed.[5] After easing its “zero-COVID-19” policy, China's economy rebounded strongly in the first quarter.
The International Monetary Fund (IMF) predicted that China would grow by 5.2% this year and 5.1% in 2024. In its World Economic Outlook released last week, the IMF said China is “rebounding strongly” following the reopening of its economy.
Official figures released on April 18th should help allay some of the scepticism about China's economic recovery.[6] Much of China's growth over the past 12 months was concentrated in the last three, during which it expanded at an annualised pace of about 9%.[6]
China's GDP grew 3% year on year in 2022, and 2.9% year on year in the fourth quarter of last year. The growth in GDP beat economist estimates, and the figures suggest that China's economy continued to recover from a difficult 2022 that was plagued by “zero-COVID” policies such as large-scale lockdowns.[3]
The rebound in China's economy is expected to buoy the global economy as the US and European economies slow down. The growth in China's economy is also a positive sign for the country's Belt and Road Initiative (BRI) which aims to connect more than 70 countries across Asia, Europe, and Africa, with infrastructure projects such as railroads, highways, and ports. The BRI has been hit hard by the COVID-19 pandemic, but China's economic recovery is expected to give it a boost.
Overall, the data released by the National Bureau of Statistics suggests that China's economy is rebounding faster than expected, surpassing growth estimates for the first quarter of the year, after the country relaxed its onerous COVID-19 restrictions and consumer spending surged.
0. “China’s economy grows 4.5 percent, beating expectations” Al Jazeera English, 18 Apr. 2023, https://www.aljazeera.com/economy/2023/4/18/chinas-economy-grows-4-5-percent-beating-expectations
1. “Update: China’s First-Quarter GDP Grows 4.5% on Pick-Up in Consumption, Industrial Production” Caixin Global, 18 Apr. 2023, https://www.caixinglobal.com/2023-04-18/chinas-gdp-grows-x-in-first-quarter-below-missingexceeding-meeting-expectations-102020552.html
2. “Covid: China economy rebounds after pandemic measures lifted” BBC, 18 Apr. 2023, https://www.bbc.com/news/business-65307471
3. “Why Shares of Alibaba Fell Today” The Motley Fool, 18 Apr. 2023, https://www.fool.com/investing/2023/04/18/why-shares-of-alibaba-fell-today/
4. “Forex Today: Mood improves modestly on upbeat Chinese data” FXStreet, 18 Apr. 2023, https://www.fxstreet.com/news/forex-today-mood-improves-modestly-on-upbeat-chinese-data-202304180801
5. “CNBC Daily Open: China reported an economic boom” CNBC, 18 Apr. 2023, https://www.cnbc.com/2023/04/18/stock-markets-china-reported-an-economic-boom.html
6. “China's new GDP figures may restore faith in its economy” The Economist, 18 Apr. 2023, https://www.economist.com/graphic-detail/2023/04/18/chinas-new-gdp-figures-may-restore-faith-in-its-economy
