China GDP: as lockdowns weigh on first quarter growth, will Beijing unleash more stimulus?

Name: Shanghai’s citywide Covid-19 lockdown spurs race to stockpile food across China
Uploaded: 2022-04-12T15:00:17.000Z
Duration: 1 min 27 s
Description: Shanghai’s citywide Covid-19 lockdown spurs race to stockpile food across China

China’s first quarter economic growth data is expected to reflect pressure from widespread Covid-19 restrictions

Debate is raging over whether a jolt of stimulus is needed to offset more challenges in the second half of the year

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China’s economy has been under pressure from the coronavirus and strict containment measures. Photo: Bloomberg

Frank Tang

Published: 11:00pm, 12 Apr 2022Updated: 12:47am, 13 Apr 2022

China’s economic growth likely suffered in the first quarter as a result of heavy-handed restrictions used to contain the highly contagious Omicron variant, with the initial costs expected to be reflected in economic data out next week.

With leading indicators pointing to significant downward pressure on the economy, Beijing has deployed teams of bureaucrats across the country to gather on-the-ground feedback on economic performance and business grievances.

Premier Li Keqiang has held discussions with entrepreneurs, experts and local officials on how to shore up the economy after acknowledging headwinds were “more-than-expected”. He also pledged new support policies after introducing tax rebates for sectors hit hard by the pandemic.

At a meeting on Monday with economic officials from five provinces, including prosperous Guangdong and Zhejiang, he asked local authorities to keep employment and prices stable.

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Shanghai’s citywide Covid-19 lockdown spurs race to stockpile food across China

“We need to be highly vigilant for unexpected changes in international and domestic situations, as downward economic pressure has further mounted,” he said.

As challenges mount, analysts are arguing over whether an immediate jolt of stimulus is needed to offset even more challenges anticipated in the second half of the year.

China’s gross domestic product (GDP) soared by 18.3 per cent in the first quarter of 2021 from a year earlier, but year-on-year growth slowed to 4.0 per cent in the fourth quarter.

Macquarie Capital expects this year’s first quarter GDP growth to be flat from the previous quarter at 4.0 per cent, while ING Bank lowered its growth forecast for the January-March period to 2.28 per cent, from the previous 2.5 per cent.