China: Q1 GDP expected to expand above estimates – UOB

UOB Group’s Economist Ho Woei Chen, CFA, assesses the latest set of economic data releases in the Chinese economy.

Key Quotes

“China’s Jan-Feb economic data largely kept up with expectation of a sharp rebound from the low base last year, which suggests that the recovery momentum has remained intact. Additional data cited by the National Bureau of Statistics which stripped out the low base effect showed that industrial production had expanded by a remarkable pace in Jan-Feb that was above the average growth in the pre-pandemic period. While manufacturing has continued to drive the positive outlook, there was also further signs of improvement in retail sales and fixed asset investment which were higher compared to the same period in 2019 (pre-pandemic).”

“The Jan-Feb economic data released today suggests that China’s GDP growth would likely be stronger than our forecast of 11.7% y/y in 1Q21, assuming that the momentum does not slacken significantly in March. While we maintain our full-year 2021 GDP forecast for China at 8.5%, we now see 1Q21 growth at 13.5% y/y and this should taper down to 9.0% in 2Q21 and average around 6.5% in 2H21.”