China’s gross domestic product (GDP) grew by 4.5% in the first quarter of 2023, marking the highest growth rate since the first quarter of 2022, when it grew by 4.8%.
The growth was better than the 4% forecast in a Reuters poll. The country’s economy expanded 2.2% quarter-on-quarter, while retail sales jumped 10.6% in March as online sales of physical goods picked up.
On the other hand, industrial output rose 3.9%, slightly lower than Reuters’ forecasts of 4%.
Year-to-date fixed asset investment rose 5.1%, less than expected, compared to a year ago, as growth slowed in infrastructure and manufacturing investment, while real estate investment continued to decline.
Goldman Sachs has said that China’s first-quarter growth supports the firm’s full-year outlook for the economy to grow 6%. Most analysts do not expect a change in the central bank’s benchmark lending rate, but some believe the People’s Bank of China could marginally cut its one-year loan prime rate if China’s inflation slows further.
China’s consumer inflation hit an 18-month low earlier this month. ING’s Chief China economist expects the Chinese government to release extra stimulus to boost infrastructure investments and consumption, and services production rose 9.2%, led by accommodation, catering, and information technology services in March.
China’s economy is expected to see another boost from government stimulus later in the year. The latest reading pushes back against sceptics of China’s ability to reach its 2023 full-year growth target. Policymakers are likely to maintain a “pro-growth” stance for demand to pick up, and China’s economic recovery could take longer than expected.