Status: 04/18/2022 09:50 am
Corona is causing less consumption and more unemployment in China: The economy grew by 4.8 percent in the first quarter. However, the government’s target of 5.5 percent growth by 2022 is likely to be difficult to achieve.
Despite the restrictions imposed to deal with the corona pandemic, China achieved unexpectedly strong growth of 4.8 percent in the first quarter. However, according to the Beijing Bureau of Statistics, economic momentum in the second-largest economy has weakened since March.
“Downward economic pressure has increased,” spokesman Fu Linghui told reporters in Beijing. Domestic consumption has decreased. “Since March, the situation in the world has developed in a complicated way. The impact of the epidemic in the country continues,” he said.
many affected areas
Problems in the production and operation of Chinese companies have increased. Transportation and logistics are also affected. China’s government had set a growth target of 5.5 percent for the full year. However, the full extent of the corona outbreak and the curfews, as well as the effects of the Ukraine war, could not be sufficiently taken into account.
The growth of the first quarter is above the forecasts of the experts, who had little more than four percent. The increase was also stronger than in the weak fourth quarter of the previous year, when only 4.0 percent was achieved.
Retail sales collapsed
Corona restrictions are expected to continue to weaken the economy in the second quarter. An indication of this is the surprisingly sharp drop in retail sales in March by 3.5 percent compared to the same month last year.
However, industrial production developed somewhat better than expected with an increase of 5.0 percent. Fixed investment also rose more than expected in the first quarter, by 9.3 percent overall. In March, however, they were notably weaker, only rising 0.61 percent compared to the same month last year.
China is currently experiencing the largest corona wave since the pandemic began more than two years ago. With the most populous country following a strict zero covid policy, there are extensive curfews in Shanghai and other metropolitan areas. Tens of millions of people are unable to leave their homes. Many companies have to close their operations. Freight traffic is also restricted.
The central bank wants to stimulate the economy
The outages are likely to continue for weeks. To stimulate the economy, the central bank announced on Friday that it would slightly reduce banks’ minimum reserves. This should provide the economy with around 530 billion yuan (76 billion euros) in long-term liquidity.
China’s economy achieved strong growth of 8.1 percent last year, even if momentum slowed significantly in the fourth quarter. However, the strong growth in 2021 is also explained by the low comparison base of 2020, when the pandemic had paralyzed the economy.