China’s GDP rose 5.3% in the first quarter, but it doesn’t mean the economic pain is over
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- China’s economy grew 5.3% in the first quarter of 2024, surpassing analyst expectations.
- Despite this, March retail sales and industrial output fell short of forecasts.
- China’s property market struggles persist, with 1Q new home sales falling nearly 31% from a year ago.
China reported robust economic growth for the first quarter of 2024.
The world’s second-largest economy grew 5.3% in the first quarter of this year from a year ago, according to the National Bureau of Statistics — beating the 4.8% growth analysts polled by Bloomberg had forecast and the 5.2% growth it chalked up in the fourth quarter of 2023.
“We have got off to a solid start,” Sheng Laiyun, the NBS’ deputy director, said at a press briefing in Beijing, per Bloomberg. He said industry was an important contributor to growth, contributing to more than one-third of first-quarter growth.
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China’s economy was also supported in the first quarter by consumer spending for the Chinese New Year holidays in February, Louise Loo, the China economist at Oxford Economics, wrote in a note on Tuesday.
Despite the rosy figures, a closer look at the figures indicates there’s still pain ahead.
March retail sales rose 3.1% from a year ago, missing Bloomberg forecasts of 4.8% growth. Industrial output for March also missed forecasts, coming in at 4.5% — well below the 6% predicted by analysts.
“‘Standalone’ March activity indicators suggest weakness coming through post-Lunar New Year,” Loo added.
In particular, China’s property market continued to be in the dumps amid a debt crisis, with first-quarter new home sales by value tanking nearly 31% from a year ago.
Notably, the data did not include China’s youth unemployment rate, which hit a record high of 21.3% in June 2023 before Beijing revamped the methodology for the metric to exclude full-time students.
Loo expects headwinds to China’s second-quarter growth as household spending normalizes and as inventory build-up is released onto the market.
China has a growth target of around 5.0% this year.
This is a developing story. Please check back for updates.
