China’s first-quarter GDP growth accelerates above forecasts

In the first quarter of 2023, China’s GDP grew by 4.5% compared to the first quarter of 2022 and by 2.2% compared to the fourth quarter of 2022. This is should from data published on April 18 by the State Bureau of Statistics (SBS) of the country. In 2022, China’s GDP grew by a record low since 1976 (not counting covid 2020) 3% and for the first time missed the 5.5% growth target.

The growth of the extractive industry in the first quarter of 2023 amounted to 3.7% year on year, processing – 3.3%, services – 5.4%. Growth in agriculture amounted to an annualized rate of 3.6%. In the first quarter of this year, total retail sales of consumer goods increased by 5.8% year on year, while in the previous quarter of 2022 it decreased by 2.7%.

“Production and demand recovered steadily, employment and prices remained broadly stable, household incomes continued to grow, market expectations improved significantly, and the national economy made a good breakthrough in the first three months of the year,” the PRC said.

The results of China’s GDP growth exceeded the expectations of Western analysts (experts polled by Reuters assumed an annual growth of 4%), they also improved the annual forecast.

Citi raised its forecast for China’s GDP growth in 2023 to 6.1% from 5.7% previously. Back in March, the annual forecast of the International Monetary Fund (IMF) was improved to 5.4%. The growth target set for the Chinese economy at the beginning of the year by former Chinese Premier Li Keqiang is 5%. This landmark was announced after the Chinese authorities in early December 2022 set a course to abandon the policy of “zero tolerance” for the coronavirus.

The easing of restrictions was preceded by mass protests, as well as negative economic dynamics. The coronavirus restrictions of the previous two years severely curtailed business activity in China and demand from the Chinese population for goods and services, and imposed strong restrictions on China’s foreign trade, says Yana Leksyutina, professor at St Petersburg University.

After the easing of quarantine measures, there is a recovery in business activity and consumer demand in China, which is confirmed by the growth of the Chinese economy in the first quarter, the expert said. “We can say that the factor of coronavirus restrictions is already leaving the agenda of the Chinese leadership, which, however, does not cancel many other difficulties that the Chinese economy has to overcome,” says Leksyutina.