China’s economic output surprised on the upside in the first three months of 2022, posting year-on-year growth of 4.8%, well above analysts’ expectations.
On the one hand, March activity slowed sharply as the draconian Covid-19 lockdowns dramatically hampered activity, with malaise in the service sector showing signs of spreading to manufacturing. On the other hand, total social finance, the country’s broadest credit measure, reached 4.7 trillion yuan ($730 billion) in March, where economists had expected 3.7 trillion.
This is certainly the calm before the statistical storm. Gavekal researchers estimate that cities, which generate over half of GDP, were facing some form of restrictions in early April.
Endless restrictions on movement could trigger a recession, but while the People’s Bank of China announced another cut in reserve requirements for banks on Friday, it didn’t change interest rates. Investors who have opted for drastic easing are disappointed.
The benchmark CSI300 stock index fell on the GDP report, likely because this rosier-than-expected print will help the PBOC justify its conservative interest rate for a while longer.
China’s GDP surprise fuels debate – SABC News
Source link China’s GDP surprise fuels debate – SABC News