International | Apr 16 2009
By Rudi Filapek-Vandyck
China’s economy has slumped further in the first three months of 2009, making the government’s official growth target of 8% a far distant feature, and turning all discussions whether the official target will be achieved or not this year into a simple waste of time. However, in line with current rediscovered global investor optimism, markets are likely to take guidance from the fact that Q1 might potentially mark the bottom in this economic downturn, plus the fact today’s released March data offer tentative signs the worst may be over for tomorrow’s economic superpower.
China’s annual gross domestic product growth fell to 6.1% in the March quarter, according to a release by the National Bureau of Statistics. The reported GDP figure was not only down from 6.8% in the fourth quarter of 2008 but also below market consensus forecasts of 6.3% or 6.2% rise (depending on which source we rely on). The reported 6.1% GDP growth figure marks the weakest growth for China since quarterly records began in 1992. It compares with 13% GDP growth in 2007, when things were so much different from today.
According to newswire reports, economic growth in Q1 was dragged down largely by a sharp fall in exports in the first three months. This was partially offset by the implementation of the government’s RMB4trn (US$585bn) stimulus package, which is believed to help prompt a surge in lending in the first quarter.
A positive surprise from figures released by the National Bureau of Statistics came from the annual growth in urban fixed-asset investment that surged unexpectedly to 28.6% in the first three months. Industrial output growth was announced to be 8.3% in March, up from a record low 3.8% in both January and February.Retail sales rose 15% in the first quarter and 14.7% in March.
The consumer price index (CPI) in the first quarter of 2009 fell an annualized 0.6%, and the producer price index also registered a negative growth of 4.6%.
March consumer prices surprised, falling 1.2% annualised in March compared with a market expectation of a price fall in the order of 1.4% during the month.
The statistics agency did not give a year-on-year figure for the producer price index in March, but said it declined 0.3% in March compared with February, a smaller monthly rate of decline than in the previous two months.