China’s Economy Grows 4.5 Percent, Exceeds Economists’ Predictions


China recorded gross domestic growth (GDP) by 4.5 percent in the first quarter of 2023. That figure exceeds the forecast of para economistnamely 4 percent.

China’s economy started solid in early 2023 as consumers spent big after three years of strict Covid-19 restrictions had ended.

However, private investment has barely budged and youth unemployment is soaring. This suggests that private sector employers in the country are still wary of the long term prospects.

“The combination of a steady increase in consumer confidence and the release of restrained demand that has yet to fully materialize means that a consumer-led recovery still has room to move,” said Louise Loo, economist at Oxford Economics. CNN BusinessTuesday (18/4).

Meanwhile, industrial performance also showed a steady increase which rose to 3.9 percent in March. This is higher than in January and February, which was 2.4 percent.

Last year, China’s GDP grew only 3 percent. This is inseparable from Beijing’s rules to carry out restrictions due to Covid-19 which in the end disrupts the supply chain and hits consumer spending.

After mass protests swept across China and local governments ran out of cash to pay their huge covid-19 bills, authorities finally scrapped the zero-covid policy last December. The economy then began to show signs of recovery.

Last month, non-manufacturing activity soared to its highest in more than a decade, indicating the country’s essential services sector is benefiting from a resurgence in consumer purchasing power following the end of pandemic restrictions.

As the economic recovery continues to strengthen, investment banks and international organizations have increased China’s growth projections for this year.

In its World Economic Outlook released last week, the International Monetary Fund (IMF) said China is improving strongly, after reopening its economy. China’s economy is predicted to grow by 5.2 percent this year and 5.1 percent in 2024.

However, some analysts believe China’s strong economic growth in the first quarter was the result of ‘backloading‘ economic activity from the fourth quarter of 2022 that was weighed down by pandemic restrictions.

“Our core view is that the Chinese economy is deflationary,” said Raymond Yeung, chief economist for Greater China at ANZ Research.

[Gambas:Video CNN]



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