Analysts doubt Iran war will prompt China stimulus, tip ‘solid’ first-quarter GDP growth
Flexible growth target means little likelihood of imminent stimulus, but focus will switch to impact of disruptions in second quarter
The US-Israeli war on Iran and the current Iranian and American blockades of shipping through the Strait of Hormuz are likely to overshadow China’s first-quarter economic performance, analysts said, with questions looming large about how the world’s second-largest economy will handle their impact.
Many observers said they expect the leadership in Beijing will adopt a wait-and-see approach, with little likelihood of an immediate stimulus to guarantee the country’s annual economic target is met.
“The first-quarter performance should be solid,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered, predicting gross domestic product growth of around 4.8 per cent on the back of resilient trade and gradually improving consumption.
He said that forecast was set against a relatively high base last year, and “if realised, it would meet or even exceed Beijing’s expectations”.
His forecast is in line with the average of economists’ forecasts compiled by financial data provider Wind.
The National Bureau of Statistics is due to release first-quarter GDP figures on Thursday, offering an early indication of how successful the Chinese economy has been in weathering several months of geopolitical tensions, particularly in the wake of the war.
Ding said the Middle East conflict was likely to have a greater impact on the Chinese economy in the second quarter of the year, when policymakers would closely monitor risks and adjust policies as needed. However, China had fared better than other countries in absorbing the shock, thanks to its diversified energy supply system, which had helped cushion the impact of the conflict on economic activity.
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The flexible GDP target adopted at the annual meeting of the national legislature last month had also left policymakers with ample room to manoeuvre, Ding said, adding this meant there was little need to adjust policy at this stage.