BEIJING (BLOOMBERG) - China's economic growth accelerated in the first quarter, although the damage from Covid-19 outbreaks and the lockdowns to contain them has yet to be fully reflected in the official figures.
Gross domestic product (GDP) rose 4.8 per cent in the January to March period from a year earlier, faster than the 4 per cent increase registered in the fourth quarter and higher than the 4.2 per cent median estimate in a Bloomberg survey of economists.
March data showed a marked deterioration in consumption while production held up, according to the National Bureau of Statistics data released on Monday (April 18).
Retail sales in March contracted 3.5 per cent from a year ago, the first decline since July 2020 and worse than economists projected. Industrial output rose 5 per cent, above the 4 per cent median forecast by economists. Investment growth in the first quarter slowed to 9.3 per cent, above the median estimate of an 8.4 per cent increase.
The data likely does not capture the full extent of the damage inflicted on the economy from Covid lockdowns, which intensified towards the end of March when financial and trade hub Shanghai, a city of 25 million people, began a phased lockdown.
Since then, several other places including Suzhou and parts of Zhengzhou have also imposed tighter controls to combat infections, forcing manufacturers such as iPhone assembler Pegatron to shut production.
Spending has taken a knock as millions of consumers are confined to their homes, and a shortage of truckers and other logistical problems cause delays in deliveries.
On a quarter-on-quarter basis, the economy expanded at a slower pace of 1.3 per cent, suggesting weakening growth momentum. The surveyed jobless rate climbed to 5.8 per cent in March, the highest since May 2020.
With outbreaks showing no signs of ending and President Xi Jinping doubling down on his strict zero-Covid-19 approach, economists say China will struggle to meet its ambitious goal of growing the economy by around 5.5 per cent this year.
The consensus now is for GDP growth to slow to 5 per cent this year, with the economy also having to contend with geopolitical tensions, heightened global inflation pressures and slowing external demand.
Surprisingly strong economic activity reported for the first two months of the year helped to bolster growth in the first quarter.
The rapid deterioration in growth has caught Beijing off guard. Top leaders have issued frequent warnings about economic growth in the past week and pledged stronger monetary and fiscal stimulus to shore up the economy.
On Friday, the central bank said it would lower the reserve requirement ratio for most banks by 25 basis points but refrained from cutting interest rates and injecting liquidity into the economy.