China’s National Bureau of Statistics reported disappointing first quarter GDP growth of 7.7 percent on Monday, according to Reuters:
Many investors had anticipated a possible surprise on the upside, with growth faster than the consensus, after a surge in liquidity in the economy during the first quarter and an uptick in export growth.
The liquidity and export data had encouraged expectations that growth would accelerate again in the first quarter, after snapping seven straight quarters of weakening expansion in the previous quarter thanks to policy action to put momentum back in the economy.
“This number may well explain my there was so much liquidity support in Q1,” Tim Condon, head of Asian economic research at ING in Singapore, told Reuters.
“Industrial production is unexpectedly weak and that’s the source of weakness in GDP. Based on this, the consensus GDP forecasts are going to be headed lower and we’ll certainly be looking at ours.”
Slumping factory output and soft consumption proved the biggest headwinds, report Simon Rabinovitch and Jamil Anderlini of The Financial Times, as the economy pulled back from the 7.9% figure posted in the fourth quarter of 2012. One economist told The Wall Street Journal that “overall these figures are pretty weak,” and said the data reduced the likelihood that the Chinese government would tighten monetary policy. A spokesman for the statistics bureau, however, said that the lower-than-expected growth figure should not cause alarm. From The New York Times:
“Over all in the first quarter the economy had a steady start and has advanced in a stable way,” Mr. Sheng said at a news conference in Beijing. “Generally, it’s operating within the range of 7.4 percent to 7.9 percent — that is, steady growth.”
China’s industrialization and urbanization would remain powerful engines for relatively rapid growth, Mr. Sheng said.