Source of this article: Times Finance Author: Wang Chenting
Economic data for the first quarter of 2024 will be released on April 16, what kind of report card will China's economy deliver?
According to Times Finance, a number of institutions have recently raised their forecasts for GDP growth in the first quarter. Based on the forecasts of seven institutions, the year-on-year GDP growth rate in the first quarter may be around 5%.
Watchmaking: Times Finance Wang Chenting
A number of indicators have improved, and the positive factors driving the economic rebound are accumulating and strengthening. The good start in the first quarter has also laid a good foundation for achieving the expected economic growth target of 5% for the whole year.
GDP growth is expected to reach 5% in the first quarter
Recently, a number of economic indicators have improved significantly. China's manufacturing purchasing managers' index (PMI) released in March jumped 1.7 percentage points to 50.8, returning to expansion territory for the first time in five months, stronger than expected.
Considering that the economic data from January to February was also better than expected, Guosheng Securities believes that the GDP in the first quarter may reach about 5%, compared with the previous market expectation of about 4.5%.
Source: Picture Worm Creative
CICC also raised its forecast for the year-on-year GDP growth in the first quarter, from around 4.5% to 5.0%-5.5%.
According to CICC's analysis, the main economic data in the first two months were significantly better than market expectations, which was affected by leap year factors, and also partly reflected the marginal improvement of economic fundamentals. Overseas economies are performing better, and their inventory cycles are driving China's exports. The larger-than-expected boom in the consumption of goods and services during the Spring Festival holiday has been boosted by phased factors, and it cannot be ruled out that it is affected by economic restructuring.
The main economic indicators released for January and February show that the economic vitality has gradually recovered, and most indicators have maintained a good growth momentum or accelerated, such as the added value of industrial enterprises above designated size increased by 7.0 percent year-on-year, and the import and export of general trade increased by 10.0 percent year-on-year.
However, some economic indicators slowed in March. High-frequency data in March showed that compared with January and February, the year-on-year decline in real estate sales has expanded, the year-on-year growth rate of automobile retail sales and crude steel production has slowed down, and although subway passenger traffic has remained high, its year-on-year growth rate has slowed down as the base effect fades.
In addition, Wang Tao, head of Asian economic research and chief economist at UBS, believes that as the Spring Festival effect fades, the CPI (consumer price index) may weaken again, while the PPI (industrial producer price index) may still continue to fall year-on-year. All things considered, the quarter-on-quarter GDP growth rate in the first quarter may improve to about 6%, but the high base may drag down its year-on-year growth rate to 4.5-5% from the previous 5.2%.
CMBC Macro also expects GDP to increase by about 5.0% year-on-year in the first quarter.
"Externally, the momentum of the global economic recovery has recovered. Developed countries or economies such as the United States, Europe, and the United Kingdom have maintained high interest rates, but financial conditions have eased in anticipation of interest rate cuts in the middle of the year. Wen Bin, chief economist of Minsheng Bank, told Times Finance that mainland exports picked up from January to February, and manufacturing PMI export orders also rebounded in March, and the external demand faced by the mainland economy showed signs of improvement. Internally, the economy also performed better than expected in the first quarter.
Source: Picture Worm Creative
Who is the main force in the troika?
Specifically on the "troika" that drives economic operation, who will be the main force of growth in the first quarter?
Consumption contributed more than 80% to economic growth last year and is expected to continue to play a major role this year. Since the end of last year, the consumer confidence index has stabilized and rebounded. During the Spring Festival holiday, holiday consumption such as dining out and visiting relatives and friends continued to boost, and service consumption became a new consumption growth point.
At the same time, auto sales also slowed down, with retail sales in the passenger car market increasing by 7% year-on-year in March, down 10 percentage points from January to February. However, with the continuous optimization and adjustment of policies at both ends of real estate supply and demand, the marginal improvement in commercial housing sales may drive the stabilization and recovery of residential-related consumption.
As a result, Western Securities expects that the total retail sales of consumer goods in March will increase by 5.5% year-on-year, flat with the cumulative year-on-year growth rate from January to February, while the China Bank of China Macro expects that the growth rate of total retail sales of social goods in March will fall from 5.5% to about 4.5%.
The investment side may continue to diverge. Bian Quanshui, chief macro analyst of Western Securities, believes that the negative growth of real estate investment and the high growth of infrastructure and manufacturing investment may continue. It is estimated that fixed asset investment in the first quarter will increase by 4.3% year-on-year, accelerating from the cumulative growth rate of 4.2% from January to February.
Wang Tao believes that the growth rate of overall fixed asset investment in March will drop slightly to 3.5-4% from 4.2% in January and February, and the year-to-date growth rate will be 4%.
He analyzed that the year-on-year growth rate of infrastructure investment in March may slow slightly to 7-8% from 9% in January-February. The issuance of local government special bonds in March was 230 billion yuan, plus 347 billion yuan in February and 57 billion yuan in January, and the issuance volume in the first quarter of this year was significantly lower than the same period in 2023. However, as of February, all the funds raised from the 1 trillion yuan of special treasury bonds issued in the fourth quarter of last year had been invested in 15,000 public projects, which helped boost the growth rate of infrastructure investment in the first quarter.
"At the same time, manufacturing investment is likely to remain strong at 7-8%, albeit slightly cooler than previously (9.4%). Considering the continued weakness of real estate investment, the growth rate of fixed investment may decline slightly overall. Wang Tao said.
In terms of foreign trade, it ushered in a "good start". The export data from January to February exceeded market expectations, with exports of 528.01 billion US dollars in US dollars, an increase of 7.1%. In terms of prosperity indicators in March, new export orders rebounded sharply by 5 percentage points month-on-month to 51.3%, and the import orders index rebounded by 4 percentage points month-on-month to 50.4%, both of which stood on the line of prosperity and withering, reflecting the marginal upward trend of domestic and foreign demand.
Source: General Administration of Customs
However, considering the high base of exports last year, the market expects that the year-on-year growth rate of exports in March may turn negative. The People's Bank of China macro predicts that exports in March will be 289.8 billion US dollars, a year-on-year increase of -4.2%, imports will be 207 billion US dollars, an increase of 1.2% year-on-year, and a trade surplus of 82.8 billion US dollars, an increase of 7.5% year-on-year.
As for the GDP trend in the second quarter, Jiang Fei, a macroeconomist at Great Wall Securities, believes in an interview with Times Finance that from the year-on-year trend of GDP last year, the second quarter is a high base, or further restricts the growth rate in the second quarter of this year. "But if a series of favorable conditions such as more government bonds, real estate policy relaxation, real interest rate reduction, and export environment repair continue to accumulate, there may be room for further recovery in GDP in the second quarter. ”