China’s economy got off to a strong start in 2022, recording a growth rate that exceeded expectations. But with the country facing a significant rise in Covid-19 rates and with dozens of cities under lockdown, the coming months could pose more challenges.
China’s Gross Domestic Product (GDP) grew 4.8% in the first three months of the year compared to the same period last year, according to data released by the country’s National Bureau of Statistics on Monday (18).
The figure is higher than the 4% increase recorded by the world’s second-largest economy in the previous quarter, and also surpassed the 4.4% growth rate forecast by economists polled by Reuters.
Growth was driven by surprisingly good economic performance in January and February, with several economic indicators for those two months beating analysts’ forecasts.
But Beijing’s efforts to contain its worst Covid-19 outbreak in two years dealt a blow to economic activity in March, including in Shanghai, the country’s financial and industrial hub. Many companies have been forced to suspend operations, including Volkswagen and Tesla and the tech company such as iPhone Pegatron.
Economic analysts estimate that nearly a quarter of China’s population and 40% of the economy are being affected by the current lockdowns.
Chinese Premier Li Keqiang has repeatedly warned last week of the threat that rising Covid-19 cases pose to economic growth and employment. Last week, the prime minister promised further interest rate cuts to boost the economy.
Days later, the People’s Bank of China announced a cut in the reserve requirement index – which determines the amount of money banks must hold in their reserves – a measure designed to stimulate lending.
The World Bank and some investment banks recently downgraded their forecasts for China’s 2022 GDP growth, citing growing risks from Beijing’s adherence to its stringent restrictions.
China’s economy grew by 8.1% in 2021, beating the government’s own targets. But the pace of expansion slowed sharply in the final months of the year. The government has set its 2022 growth target at around 5.5%, the lowest in three decades.
Source: CNN Brasil
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