China’s GDP surpassed forecasts, growing 5.3% in the first quarter of 2024

According to the government on Tuesday, China’s economy grew at a quicker rate than anticipated in the first three months of the year because to initiatives meant to spur development and higher demand.

According to official figures, the second-largest economy in the world grew at an annual rate of 5.3% between January and March, above experts’ projections of around 4.8%. In the preceding quarter, the GDP expanded by 1.6%.

After the COVID-19 epidemic, China’s economy has had difficulty recovering, with a decrease in demand and a property problem impeding its expansion.

The data exceeded expectations. Tuesday arrived only days after China said that imports had declined and exports had dropped 7.5% in March compared to the same month last year. Due to deflationary forces brought on by weak demand during the real estate crisis, inflation decreased.

Retail sales increased at a 4.7% annual rate in the first quarter of this year, while industrial production increased 6.1% from the same period the previous year. Fixed investment in machinery and industries increased by 4.5% over the same time last year.

According to Oxford Economics’ China economist Louise Loo, the high growth seen from January to March was bolstered by “broad manufacturing outperformance,” celebrations that increased household spending owing to the Lunar New Year vacations, and regulations that helped boost investments.

“Standalone” March activity indicators, on the other hand, point to weakening after Lunar New Year, the speaker said. “The sharp underperformance of exports in March indicates that the conditions surrounding external demand are still unpredictable.”

Growth in this quarter will be impacted, according to Loo, by the unwinding of excess inventories, the return to normalcy of household spending after the holidays, and a cautious approach to government expenditure and other stimuli.

As Beijing aims to stimulate the economy, policymakers have released a plethora of fiscal and monetary policy initiatives. China has set a challenging goal for GDP growth in 2024—roughly 5%.

Typically, a significant growth rate would raise share prices across the area. However, Asian equities plummeted on Tuesday after a decline in Wall Street stocks.

The Hong Kong Hang Seng fell 1.9%, while the Shanghai Composite index dropped 1.4%. The benchmark fell 2.8% for the smaller market in southern China’s Shenzhen.

Generally speaking, the neighbors of the largest economy in the area would benefit from stronger development in this sector as they depend more and more on Chinese demand to drive their own economies. Strong growth numbers, nevertheless, are also seen as an indication that the government will refrain from implementing more stimulus.