Reacting to China's GDP data for 2022, S&P Global Market Intelligence said that the "figure was slightly above expectations". Moreover, the brokerage believes that "this could be due to the expansion of stimulus policy, the faster-than-expected infection peaking, and the recovery of mobilities."
China’s real GDP growth rate for 2022 is standing at 3 percent year-on-year (YoY), with the fourth quarter GDP slowing to 2.9 percent YoY from 3.9 percent YoY in the third quarter. Moreover, infrastructure investment accelerated to 14.3 percent year-on-year from 10.6 percent through November. In addition to this, the contraction in retail sales narrowed with the unemployment rate falling.
S&P adds that the Covid-outbreak resurgence that started in November and the infection waves spreading due to the government's relaxed stance in December weakened services activities in the country and led to the decline of exports.
"We have seen a gradual recovery in mobilities, passenger flight counts and private consumption," it noted.
According to the brokerage, the more worrying fact is the structural economic moderation induced by slowing urbanisation in the country, declining labour force, and real estate downturn, which could perhaps lead to a decline in growth.
Moreover, the decline in China's population for the first time since 1961 is another worrisome sign.
The brokerage expects economic recovery to follow in the world's second-largest economy in 2023 after the reopening of Mainland China. However, global economic moderation coupled with domestic factors such as weak consumer confidence and property slowdown indicates that a robust recovery requires a stronger stimulus package in the coming year.
"However, the full reopening of mainland China’s borders is likely to be delayed until international restrictions against China-originated travel are dropped. "
However, S&P expects continuous weakness in the first quarter of 2023 as the consumption recovery remained soft entering January and with a high baseline in the first quarter of 2022, while a sharp rebound is expected in the second quarter.
It adds that the government’s increasing pro-growth stance and the economic recovery in 2023 have also reduced the likelihood of a pandemic-policy reversal.
First Published: Jan 17, 2023 2:37 PM IST
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