China’s economy grew at a faster pace than expected in the first quarter, official data showed, expanding 4.8% year on year, but the risk of a sharp slowdown in the coming months has increased as COVID-19 curbs and the war in Ukraine are paying the toll.
Gross domestic product (GDP) was expected to rise 4.4% from a year earlier, according to a Reuters analyst poll, compared with 4.0% in the fourth quarter of last year.
On a quarterly basis, GDP rose 1.3% in January-March, compared to expectations of a 0.6% rise and a revised 1.5% gain in the previous quarter.
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Heightened global risks from the war in Ukraine, widespread COVID-19 lockdowns and a weak housing market are suffocating the world’s second-largest economy, and some economists say recession risks are rising.
The government’s determination to stop the spread of record COVID-19 cases has clogged highways and ports, blocked workers and shuttered countless factories – disruptions that ripple through global supply chains for goods ranging from electric vehicles to iPhones.
Late Friday, the People’s Bank of China announced it would reduce the amount of cash banks must hold as reserves for the first time this year, freeing up about 530 billion yuan ($83.25 billion) of long-term cash. term to cushion a sharp slowdown in economic growth.
China has targeted slower economic growth of around 5.5% this year as headwinds gather, but some analysts say that now could be difficult to achieve without more aggressive stimulus.
China’s industrial output rose 5.0% in March from a year earlier, compared with a 7.5% increase seen in the first two months of the year, data from the National Bureau of Statistics.
The reading was stronger than a 4.5% rise forecast by analysts in a Reuters poll.
Retail sales in March contracted 3.5% year-on-year amid rising COVID-19 outbreaks and lockdowns, after rising 6.7% in January and February . The figure was well below expectations of a 1.6% decline.
Investments in fixed assets rose 9.3% year-on-year in the first quarter, against an 8.5% increase announced by the Reuters poll, but down from 12.2% growth in the two first months.