China: Economic results moderated in March – UOB

Economist at UOB Group Ho Woei Chen, CFA, assesses the latest set of results in Chinese fundamentals.

Key Takeaways

“China’s 1Q22 GDP expanded by 4.8% y/y (1.3% q/q SA) compared with 4.0% (1.5% q/q SA) in 4Q21. This was above consensus and our forecasts (Bloomberg est: 4.2% y/y, 0.7% q/q SA; UOB est: 4.5% y/y, 0.8% q/q) and the strong q/q growth pointed to a fairly resilient economic momentum despite the pandemic outbreak.”

“The moderation in the economic indicators in Mar came as no surprise but the slowdown was largely more contained than expected and 1Q22 growth was buffered by a strong rebound in the first two months of the year.”

“Reflecting the pandemic outbreak, retail sales reversed sharply to a contraction of 3.5% y/y in Mar as catering sales plunged by 16.4% y/y, of which restaurant sales were down 15.6% y/y. Sales of discretionary consumer goods such as jewellery and clothing also suffered a disproportionately larger hit.”

“The surge in the surveyed jobless rate warrants concern as the labour market is likely to worsen further. The 31 major cities jobless rate was at a record high of 6.0% in Mar from 5.4% in Feb, exceeding previous high of 5.9% in May 2020.”

“The impact of the domestic lockdowns and the Russia-Ukraine conflict is still uncertain at this point while the real estate market outlook has remained weak. As such, we maintain our 2022 GDP growth forecast for China at 4.9%.”