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CNN business
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The Chinese economy got off to a solid start this year and recorded better-than-expected first-quarter growth.However, recent slumps in consumer spending and rising unemployment suggest that dozens of cities are still down and a much tougher month will continue. Blockade of Covid.
China’s gross domestic product Grow 4.8% Compared to the 3 months until March 31st According to the National Bureau of Statistics on Monday, the same period last year.It was faster than a 4% increase The world’s second largest economy registered in the previous quarter.
Growth was supported by Surprisingly good Economic performance in January and February. Some of these two-month indicators exceed analysts’ expectations.
But in Beijing Efforts to curb the worst Covid Since March, it has hit activities in two years, including the country’s financial centers and manufacturing hubs. Shanghai..Many companies have been forced to suspend businesses, including: Automakers Volkswagen and Tesla And iPhone assembler Pegatron.
March retail sales were down 3.5% from a year ago, the first decline since July 2020. Industrial production in March increased by 5% from 7.5% in the first two months of the year.
“Economic development is currently facing many challenges and challenges,” NBS spokesman Fu Linghui said at a press conference in Beijing on Monday.
The March Covid outbreak disrupted production in some areas and hurt consumption, Fu said. In particular, catering, tourism and transportation services have been hit hard.
He said the unemployment rate increased as a result of the “Covid shock.”
The unemployment rate in 31 major cities surged to 6% in March, a record high. The unemployment rate for 16-24 year olds reached 16%, the highest level in eight months.
The Chinese government has set a growth target of about 5.5% this year, the lowest in 30 years. However, the outbreak of Covid, coupled with the war in Ukraine that has pushed up oil and commodity prices, already appears to be out of reach of many economists.
“April economic data will be even worse,” said Larry Fu, chief economist at Macquarie Group’s Greater China, on Monday. He expects annual growth to be around 5%.
Some analysts have even talked about the risk of a recession this quarter as China’s continued crisis in real estate puts more pressure on it.
“April activity data will plummet as the risk of a recession in the second quarter increases,” said an analyst at Japanese investment bank Nomura.
“Beijing’s GDP growth target [about] This year’s 5.5% is becoming more and more difficult, and now there is a significant downside risk to the annual GDP growth forecast of 4.3%, “they added.
Shanghai is the epicenter of the current Covid outbreak, but it’s not the only one. Nomura estimates that 45 cities in China have undergone complete or partial blockades, affecting a quarter of the country’s population and about 40% of the economy.
To ease the turmoil, the Chinese government released a “whitelist” of 666 companies allowed to resume production on Friday. Nearly 40% are automobile manufacturers, that is, companies involved in supplying to the automobile industry. It is unclear when these companies will be able to resume production.
China’s Zero Corona strategy remains a major risk to China’s economic outlook.
“In reality, the economy is in trouble,” said an analyst at Societe Generale. “As we have repeatedly emphasized, the problem is the blockade — it’s still in place and it’s still widespread.”
China’s Prime Minister Li Keqiang has repeatedly warned last week about the threat posed by the surge in the Covid case to growth and employment. Last Wednesday he promised further interest rate cuts to boost the economy. Two days later, the People’s Bank of China announced a reduction in the reserve requirement ratio, which regulates the amount of cash that banks must hold as reserves. This is a move aimed at promoting lending.
— CNN’s Beijing office contributed to this report.
