Growth above expectations in China
The Chinese economy grew 4.5 percent annually in the first quarter of 2023, above expectations.
According to data from the National Statistics Office (UIB), the Gross Domestic Product (GDP) increased by 4.5 percent in the period January-March 2023 compared to the first quarter of last year.
The growth rate was above financial services utility Wind’s estimate of 2.9 percent, below the government’s target of “around 5 percent” this year.
Although GDP increased 2.2 percent in the first quarter compared to the last quarter of 2022, it is observed that policies to encourage growth after the restrictions due to Covid-19 were lifted at the end of last year, gave a positive impetus to the recovery.
GROWTH AGAIN AFTER STAGNATION
The Chinese economy grew 3 percent in 2022, recording the lowest annual output growth since 1976, after growing 2.2 percent in 2020, when the first effects of the Covid-19 epidemic were felt.
Although the March data showed that the economy resumed the direction of growth after the recession in the last quarter of last year, the still high level of youth unemployment points to the fragility of the recovery.
According to UIB data, industrial production, which calculates the output of industrial enterprises with an annual turnover of more than 20 million yuan (approximately $2.9 million), rose 3.9 percent year-on-year in March, outpacing the increase of the 2.4% in January and February.
Industrial production lost its upward momentum in the last quarter of last year, when the effect of the Covid-19 restrictions was felt, it increased by 5 percent in October 2022, while the increase slowed to 2.2 percent. in November 2022 and to 1.3 percent in December 2022.
INCREASING CONSUMPTION
Retail sales, which is accepted as a measure of consumption, increased an annual 10.3 percent in March, outpacing the 3.5 percent rise in the first two months.
Retail sales declined during the last quarter of 2022, down 0.5 percent in October, 5.9 percent in November, and 1.8 percent in December.
Fixed capital investment, including spending on infrastructure, real estate, machinery and equipment, rose 5.1 percent in the first quarter compared with the same period a year earlier, but lagged behind the 5.5 percent rise cent in the first two months.
Investments in infrastructure increased 8.8 percent, investments in manufacturing 7 percent, while investment in real estate decreased 5.8 percent. Although it was observed that the 10 percent contraction in real estate investments slowed down in the first quarter, it was observed that the effect of the financing problems in the sector continued.
YOUTH UNEMPLOYMENT IS HIGH
The unemployment rate in the cities decreased 0.3 points in March compared to the first two months and dropped to 5.3. Unemployment among the youth population aged 16 to 24 increased by 1.5 percentage points to 19.6 percent.
Despite the general decline in unemployment and rising and still high youth unemployment, it is interpreted as a sign that the economic recovery is still fragile.
Youth unemployment, which reached a record level of 19.9 percent in July last year, remained high throughout the year.
UIB spokesman Fu Linghui said the first-quarter data “means stable growth” and “is a good start to the year.” The insufficiency of domestic demand is still evident and the foundation of the economic recovery is not yet solid, ”he said. (AA)