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Economic News

China: Real GDP Grew 1.6% in the First Quarter of 2024

April 16, 2024
Marc-Antoine Dumont
Senior Economist

Highlights

  • Chinese real GDP growth came in at 1.6% (non-annualized) in the first quarter of 2024 after rising 1.2% in the previous quarter. Year-on-year, the first-quarter gain was 5.3%.
  • Chinese inflation fell again, from 0.7% in February to 0.1% in March.
  • Industrial production climbed 4.5% from March 2023. Year-on-year growth in retail sales also slowed from 5.6% in February to 3.2% in March.

Comments

China kicked off 2024 with real GDP growth that slightly beat the consensus forecast of 1.5% (quarter-on-quarter). This is a step towards the Chinese government's official annual growth target of 5.0%. But this increase hides some problems. Industrial production, retail sales, investment and average home prices all undershot expectations. While it's still a little early to see the overall trend, an economic slowdown in March could dampen real GDP growth in the second quarter.

Risks to the Chinese economy are still to the downside. The crisis in the property sector continues to be a major drag on activity, and its impact can be felt across several sectors. Faced with this reality, the central government may once again unleash more stimulus. But the measures taken so far have been unable to resolve the core issues: the property crisis and a lack of business and consumer confidence. Furthermore, Fitch Ratings External link. has downgraded its outlook on China's foreign currency debt from neutral to negative.

Implications

China's better-than-expected real GDP growth pushed our 2024 forecast to 5.0%, which matches Beijing's target. That said, today's print was also a reminder that the Chinese economy is still being held back by a number of challenges, such as the property crisis and weak domestic demand.

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