Chinese Economic Recovery Tumbles in Q1


After gaining a positive momentum at the end of 2012, Chinese GDP growth slowed to 7.7 percent year-on-year and 1.6 percent quarter-on-quarter in the first quarter of 2013, due to weak industrial output.

Indeed, in March, industrial production grew only 8.9 percent, after expanding 9.9 percent in January-February period. To make things even worst, the purchasing managers' index (PMI) fell to 50.6 in April from 50.9 in March, indicating a slowdown in manufacturing activity that will led to drop in new export orders. In fact, in March, exports only rose by 10 percent and the country reported a trade deficit of $884 million. Moreover, concerns about a rebound in inflation and high property prices have led the government to unveil on March 1st fresh tightening measures including raising downpayment and mortgage rates on loans for second home buyers in cities where prices have risen too fast and 20 percent tax on gains from sale of properties.  On the positive side, domestic consumption was the main driver of expansion in Q1, contributing 4.3 percentage points to total growth. In fact, in March, retail sales increased 12.6 percent year-on-year, up from 12.2 percent reported in a period earlier.

 

 


In the first quarter, the GDP expanded 7.7 percent, down from 7.9 percent reported a quarter earlier. In March, industrial production grew 8.9 percent, the lowest level since August of 2012.
 
In March, inflation fell to 2.1 percent from a 10-month high of 3.2 percent in February. China may need to raise interest rates should gains in the CPI stay at more than the government inflation target of 3.5 percent.
     

In March, China reported a trade deficit of $884 million as imports rose more than exports.
 
In March, retail sales increased 12.6 percent yoy while imports surged 10 percent yoy.

 


Anna Fedec, anna@tradingeconomics.com
5/13/2013 12:50:08 PM