China’s economy beats expectations, but outlook suggests a significant slowdown

Chinese building with people around it

The gross domestic product of the world’s second-largest economy grew more in the first quarter than analysts had expected. But other boom indicators suggest a sharp slowdown in the coming months.


China’s economy grew by 4.8 percent year-on-year between January and March this year. Markets and analysts had expected growth of just 4.4 percent. From this point of view, it is therefore a positive surprise. Quarter-on-quarter, China’s economy grew by 1.3 percent, double the growth rate widely expected.

But it could very likely be the last solid result for the next few quarters. March retail sales fell by 3.5 percent year-on-year, with a decline of only 1.5 percent expected. Meanwhile, as recently as January and February, Chinese households were spending nearly seven percent more than a year ago.

Residential real estate sales

A significant slowdown also came in corporate investment. While for February and January there was a year-on-year growth of more than 12 percent, for the entire first quarter investment increased by only 8.5 percent. In March alone, sales of residential properties fell significantly, by 26.2 percent year-on-year. This is the biggest drop in the last two years.


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