April 15,2009

China Expected to Release Q1 GDP Growth at 6.1%

By CSC staff, Shanghai
After 6.8% year-on-year growth was recorded in the fourth quarter of 2008, first-quarter 2009 GDP shows further apparent slowing.
GDP growth in the first quarter came in at around 6.1%, Chinastakes.com has learned. However, the growth rate is not considered too low compared to the fourth quarter, and actually has met expectations.
Stephen Green, an economist for Standard Chartered Bank, points out the first two months saw 3.8% year-on-year increase of added value in large-scale industry, down compared to 5.7% growth in December. If the decline trend of industrial and export sectors as well as moderate shocks in consumption growth are also taken into consideration, that first-quarter GDP growth is lower than the fourth quarter last year is settled.
Ma Qing, the chief economist at a research institution CEBM, predicted that first-quarter GDP growth would be around 6%. Although several indicators got a March bounce, the devil was in the details. For example, power generation was up for March, but due mainly to a first half of the month surge, growing by 1%, year-on-year. In the second half of March, output fell almost daily, down 2%, year-on-year. This shows volatility on the downward slide, and not the full recovery of demand.
CICC’s estimate for first quarter GDP growth was 6.0-6.4%, still below the level of the fourth quarter of last year. The core reason was that, although the stimulation of investment has shown effect in fixed assets, export decline, real estate investment stagnation, and the fall of retail growth brought about only 3.8% industrial growth, and profits of enterprises fell substantially, down 38%.
Greater China of JP Morgan economist Frank Gong said he figured first-quarter GDP would be around 5%-6%, based on data from the same period last year, and that as a result of the impact of 2008, second-quarter year-on-year GDP growth would also be around 6%. Therefore, including last year’s fourth quarter, China's GDP growth will maintain at about 6% for three consecutive quarters. However, Gong believes this is mainly due to base effects while sequential growth is good, and the economy will rebound in the third and fourth quarter.



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