China - Q1 GDP data even stronger than expected
In line with consensus expectations including ours, China’s real GDP growth accelerated sharply in Q1-23. This reflects the country’s rapid reopening rebound, led by services/consumption. The GDP data for Q1 came in even stronger than expected. Quarterly growth accelerated to 2.2% qoq, while annual growth rose to 4.5% yoy.
China Macro: Q1 GDP beats expectations
In line with consensus expectations including ours, China’s real GDP growth accelerated sharply in Q1-23. This reflects the country’s rapid reopening rebound, led by services/consumption. The GDP data for Q1 came in even stronger than expected. Quarterly growth rose to an above trend pace of 2.2% qoq (Q4-22: 0,6% - upwardly revised from 0.0%, consensus: 2.0%). Partly thanks to the growth revision for Q4-22, annual growth also beat expectations, at 4.5% yoy, 0.5 pp higher than the consensus expectation (including ours) of around 4%. Annual growth is expected to surge in Q2-2023, reflecting the base effect from last year – when China was faced with broad lockdowns following Omicron-flare ups, including in mega cities such as Shanghai, Beijing and Shenzhen. Following the Q1 GDP data, we will review our growth forecasts for 2023 and 2024 and publish them in our April Global Monthly soon.
Retail sales growth surges in March
Meanwhile, the activity data for March were a bit of a mixed bag. Retail sales growth jumped to 10.6% yoy, the highest pace since June 2021 (consensus: 7.5%, Jan/Feb: 3.5%). Residential property sales accelerated to 7.1% yoy in January-March (Jan-Feb: 3.5%), providing another sign that the real estate market is stabilising as consumer confidence gradually recovers. At the other hand, investment in the property market remains lacklustre (-5.8% yoy ytd, versus -5.7% in Jan/Feb, consensus: -4.7%). More broadly, fixed investment also came in weaker than expected, at 5.1% yoy ytd (Jan/Feb: 5.5%, consensus: 5.7%). The jobless rate dropped more than expected, to 5.3% (February: 5.6%, consensus: 5.5%), although the youth unemployment rate rose back to 19.6%, near a record high. Earlier this month, foreign trade, lending and the services PMIs came in stronger than expected, whereas the manufacturing PMIs lost some ground (see our comments on China’s March PMIs ). All in all, Bloomberg’s monthly GDP estimate for March jumped to a six month high of 5.9%, versus 4.4% in February.