China: More moderated outlook for Q2 GDP – UOB

Economist at UOB Group Ho Woei Chen, CFA, reviews the latest set of Chinese data releases and the impact on growth prospects.

Key Quotes

“China’s April economic data including the credit growth released last week, pointed to a moderation in growth outlook in 2Q21.”

“Industrial production was in line with consensus forecast as it moderated to 9.8% y/y (Bloomberg est: 10.0%) from 14.1% in March. Urban Fixed asset investment (FAI) was also in line with market estimates at 19.9% YTD y/y (Bloomberg est: 20.0%) but had too moderated from 25.6% YTD y/y in the preceding month. The biggest let-down was the sharp slowdown in retail sales growth to 17.7% y/y (Bloomberg est: 25.0%) from 34.2% in March, as investors pinned hopes on a stronger recovery in private consumption to drive the growth momentum in 2H21.”

“Despite the moderation in the economic indicators, the survey jobless rate improved further to 5.1% in April (Bloomberg est: 5.2%) from 5.3% in March. The survey jobless rate is at its lowest since November 2019 when it was at the same rate.”

“Our 2Q21 GDP growth forecast for China remains at 8.0% y/y from 18.3% y/y in 1Q21, as the low base effect continues to diminish.”