Mainland GDP Beats Estimates Despite Headwinds

The mainland's economy grew at a faster than expected clip in the first quarter, official data showed on Monday, expanding 4.8 percent year-on-year, but the risk of a sharp slowdown over coming months has risen as Covid-19 curbs and the Ukraine war take a toll.

Gross domestic product (GDP) had been forecast to expand 4.4 percent from a year earlier, according to a Reuters poll of analysts, picking up from 4.0 percent in the fourth quarter last year.

On a quarter-on-quarter basis, GDP rose 1.3 percent in January-March, compared with expectations for a 0.6 percent rise and a revised 1.5 percent gain in the previous quarter.

Industrial output rose 5.0 percent in March from a year earlier, down from a 7.5 percent increase seen in the first two months of the year, data from the National Bureau of Statistics showed on Monday.

The reading was stronger than a 4.5 percent increase predicted by analysts in a Reuters poll.

Retail sales in March contracted 3.5 percent year-on-year amid increasing Covid-19 outbreaks and lockdowns, after increasing 6.7 percent in January and February. The figure was well below expectations for a 1.6 percent decrease.

Heightened global risks from the war in Ukraine, Covid-19 lockdowns and a weak property market are putting a choke hold on the world's second-largest economy, and some economists say the risks of a recession are rising.

Late on Friday, the People's Bank of China announced it would cut the amount of cash that banks must hold as reserves for the first time this year, releasing about 530 billion yuan in long-term liquidity to cushion a sharp slowdown in economic growth.

The mainland has targeted slower economic growth of around 5.5 percent this year as headwinds gather, but some analysts say that may now be tough to achieve without more aggressive stimulus measures. (Reuters)