China: Growth slows to six-year low in Q1
April 15, 2015
GDP in Q1 grew 7.0% over the same period last year. The print came in below the 7.3% increase tallied in Q4 and was in line with the result that FocusEconomics Consensus Forecast panelists had expected. Q1’s print represented the slowest pace of growth since Q1 2009.
Although the National Bureau of Statistics does not provide a breakdown of GDP by expenditure, additional data suggest that growth in domestic demand was the main driver behind Q1’s moderation, as both private consumption and investment decelerated at the outset of the year. Growth in nominal retail sales decelerated slightly from 11.7% in Q4 to 10.5% in Q1. In addition, urban fixed-asset investment, which includes capital and construction investment, expanded an accumulated 13.5% in nominal terms in the first quarter, which was down from the accumulated 15.7% increase recorded in the full year 2014.
On the external side of the economy, nominal merchandise exports decelerated to a 4.6% expansion in Q1 (Q4: +8.6% year-on-year), while imports contracted 17.6% annually in the same period (Q4: -1.7% yoy). Although the still robust trade balance surplus signals that the external sector could have contributed positively to overall growth in Q1, the sharp downturn in imports highlights that domestic demand remains weak.
On a quarterly basis, GDP expanded a seasonally-adjusted 1.3% in Q1 (Q4: +1.5% quarter-on-quarter), which marked the softest increase since records for sequential data began in Q4 2010.
Economic activity moderated in Q1, which is consistent with Chinese authorities’ willingness to tolerate slower growth under the “new normal” approach.