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The economic recovery in China increased rapidly in the first quarter due to a downturn caused by coronavirus earlier last year, driven by stronger domestic and international demand and continued government support for smaller businesses.
Gross domestic product (GDP) rose 18.3% in the first quarter from a year earlier, official data showed on Friday, slower than the 19% forecast by economists in a Reuters poll, and after 6.5% growth in the fourth quarter last year.
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While the reading had skewed sharply a year earlier, the increase is the strongest since at least 1992, when official quarterly records began.
“China’s first quarter started well, especially in retail sales, which were behind the economic recovery. In the future, the focus will be on how to continue growth and manage financial risk,” said Marco Sun, chief executive. financial analyst from MUFG Bank, said. Shanghai.
“If we talk about managing financial risk, we’ll probably see quantitative easing through guidelines on credit growth in the second quarter and maybe longer.”
Aided by strict virus control measures and emergency relief for businesses, the economy recovered from a sharp slump of 6.8% in the first three months of 2020, when an outbreak of COVID-19 in the central city of Wuhan turned into a full-blown epidemic has.
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The recovery led to export strength, as factories met overseas orders and steady consumption increased despite sporadic COVID-19 cases in some cities.
On a quarterly basis, growth in January-March slowed to 0.6% from a revised 3.2% in the previous quarter, which missed expectations for a 1.5% increase.
Industrial production in March grew by 14.1% year-on-year, declining from a 35.1% surge in the January-February period and a 17.2% year-on-year decline.
Retail sales increased by 34.2% year-on-year in March, an increase of 28.0% expected by analysts, and stronger than the 33.8% jump in the first two months of the year has been seen.
Fixed assets increased by 25.6% during the first three months compared to the same period a year earlier, compared to a forecast of 25.0%, and this decreased from the increase of 35% in January-February.
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The world’s second-largest economy is expected to grow by 8.6%, according to a Reuters poll, after rising 2.3% last year, the worst in 44 years, but China remains the only major economy to shrinkage avoided.
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This will easily beat the government’s 2021 annual growth target of more than 6%.
With the economy on a firmer footing, China’s central bank is focusing on cooling credit growth to limit debt and financial risks, but it is stepping in carefully to prevent the recovery from derailing, analysts said.
Policymakers, meanwhile, have vowed not to make any sudden policy shifts.
Authorities are particularly concerned about the financial risks posed by the country’s overheated real estate market, and have asked banks to refurbish their loan books this year to protect against asset losses.
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Separate data on Friday showed that China’s new house prices rose faster in March, even as authorities take measures to curb property speculation.
(Additional reporting by Stella Qiu and Lusha Zhang; editing by Sam Holmes)