Chinese Q1 Growth Slides to Lowest Ever at 6.1%
BEIJING China struggled out of the gate this year with its weakest quarter on record, but a pick-up in March showed the world’s third-largest economy was on track for stronger growth in coming months.
Annual economic growth slowed to 6.1 per cent in the first quarter from 6.8 per cent in the fourth quarter, official data showed on Thursday, slightly missing economists’ 6.3 per cent forecast and marking the weakest expansion since quarterly records began in 1992.
A surge in lending and public spending cushioned a collapse in exports, suggesting that while Beijing may yet do more to prop up demand, it need not launch a new stimulus package on the scale of its 4 trillion yuan ($585 billion) plan announced last year.
But analysts said that quarter-on-quarter growth, which the government does not publish, was in the range of 5.3-6.2 per cent in the first quarter, considerably above their estimates of 0.9-2.5 per cent for the final three months of 2008.
“The series of policies to expand domestic demand and promote stable and quite fast growth are beginning to show results,” the official Xinhua news agency said summarising a meeting of China’s State Council, or cabinet.
“There are positive changes in the economy and the situation is better than expected,” said the report of the meeting, which was chaired by Premier Wen Jiabao.
The cabinet also struck a cautious note, warning against “blind optimism” about the economy. It promised to take steps to encourage private investment, which it said was still too weak, and said it would study how to attract more foreign investment.
The cabinet vowed to tweak existing stimulus measures and guide the flood of bank credit to ensure it reaches the economy, but it made no mention of a new stimulus package, an idea that had surfaced as a market rumour in recent days.
Analysts said the economy’s momentum lent more credence to Beijing’s assurances that it can reach its 2009 growth goal of 8 per cent, widely seen as a minimum for creating enough jobs for the country’s ever-expanding labour force.
With the United States, Japan and much of Europe all deep in recession, investors count on China to lead the global recovery and many had bet on a stronger number that would send a clear signal that the world’s main growth engine was back in business.
Yet when economists looked beyond the headline figure, they found reasons for optimism that China’s recovery will gather steam in coming quarters.
Annual growth in urban fixed-asset investment surged unexpectedly to 28.6 per cent in the first three months, while annual industrial output growth rebounded to 8.3 per cent in March from a record low 3.8 per cent in January-February. Where opinions differed, it was about the pace of the rebound, rather than the upward direction of the economy.
“We think that the economy will remain subdued in the next few months but should start to improve gradually in the second half of 2009,” said Brian Jackson, economist at Royal Bank of Canada In Hong Kong.
On a positive note, deflationary pressures appeared to ease at the consumer level with prices falling 1.2 per cent in March from a year earlier.
Annual economic growth slowed to 6.1 per cent in the first quarter from 6.8 per cent in the fourth quarter, official data showed on Thursday, slightly missing economists’ 6.3 per cent forecast and marking the weakest expansion since quarterly records began in 1992.
A surge in lending and public spending cushioned a collapse in exports, suggesting that while Beijing may yet do more to prop up demand, it need not launch a new stimulus package on the scale of its 4 trillion yuan ($585 billion) plan announced last year.
But analysts said that quarter-on-quarter growth, which the government does not publish, was in the range of 5.3-6.2 per cent in the first quarter, considerably above their estimates of 0.9-2.5 per cent for the final three months of 2008.
“The series of policies to expand domestic demand and promote stable and quite fast growth are beginning to show results,” the official Xinhua news agency said summarising a meeting of China’s State Council, or cabinet.
“There are positive changes in the economy and the situation is better than expected,” said the report of the meeting, which was chaired by Premier Wen Jiabao.
The cabinet also struck a cautious note, warning against “blind optimism” about the economy. It promised to take steps to encourage private investment, which it said was still too weak, and said it would study how to attract more foreign investment.
The cabinet vowed to tweak existing stimulus measures and guide the flood of bank credit to ensure it reaches the economy, but it made no mention of a new stimulus package, an idea that had surfaced as a market rumour in recent days.
Analysts said the economy’s momentum lent more credence to Beijing’s assurances that it can reach its 2009 growth goal of 8 per cent, widely seen as a minimum for creating enough jobs for the country’s ever-expanding labour force.
With the United States, Japan and much of Europe all deep in recession, investors count on China to lead the global recovery and many had bet on a stronger number that would send a clear signal that the world’s main growth engine was back in business.
Yet when economists looked beyond the headline figure, they found reasons for optimism that China’s recovery will gather steam in coming quarters.
Annual growth in urban fixed-asset investment surged unexpectedly to 28.6 per cent in the first three months, while annual industrial output growth rebounded to 8.3 per cent in March from a record low 3.8 per cent in January-February. Where opinions differed, it was about the pace of the rebound, rather than the upward direction of the economy.
“We think that the economy will remain subdued in the next few months but should start to improve gradually in the second half of 2009,” said Brian Jackson, economist at Royal Bank of Canada In Hong Kong.
On a positive note, deflationary pressures appeared to ease at the consumer level with prices falling 1.2 per cent in March from a year earlier.
quoted from: Oman Tribune
