UOB Group’s Economist Ho Woei Chen assesses the latest GDP figures in China.

Key Takeaways

“China’s economy rebounded by a stronger-than-expected pace in 1Q23 following the lifting of its Covid-19 restrictions. The key beneficiary of China’s reopening was the services sector while manufacturing sector was weighed by softer external demand even as the reopening improved the logistics and activities in the supply chains.”

“China’s Mar economic data was mixed with industrial production (IP) and fixed asset investment (FAI) below expectations while retail sales surged and the labour market solidified its gains.”

“Taking into consideration of the latest data and factoring in further stabilisation in the property market, we think China’s full-year 2023 GDP growth could now potentially come in stronger at 5.6% (previous forecast 5.2%) compared to the official target of 5.0%.”

“The recovery in China’s economy meant that there is less need for the People’s Bank of China (PBOC) to further ease monetary policy despite the muted inflation. However, another RRR reduction later this year cannot be ruled out should credit expansion shows signs of a sharper slowdown.”