Updated January 17th, 2024 at 08:58 IST

China's Q4 GDP growth misses expectations, grows at 5.2%

Beijing had set a growth target of around 5 per cent for 2023, and insiders anticipate a similar goal for the current year.

Reported by: Business Desk
China | Image:Pexels
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China GDP growth: China's GDP growth reached 5.2 per cent  year-on-year, slightly below analysts' expectations but enough for Beijing to meet its annual growth target. Despite a challenging start to the year, the world's second-largest economy struggled to sustain a robust post-COVID recovery due to issues such as a prolonged property crisis, weakened consumer and business confidence, rising local government debts, and a global economic slowdown.

Contrary to predictions, the recovery from the pandemic has been lacklustre, prompting China Beige Book International to state that the disappointing rebound is now over. Analysts suggest that any substantial acceleration in the coming year will depend on either a significant global economic upturn or more proactive government policies.

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For the entire year of 2023, China's economy expanded by 5.2 per cent, in line with forecasts. However, the growth was partly influenced by the low-base effect from the previous year's COVID-19 lockdowns. On a quarterly basis, GDP increased by 1.0 per cent  in October-December, meeting expectations.

Beijing had set a growth target of around 5 per cent  for 2023, and insiders anticipate a similar goal for the current year. Despite the overall economic growth, December's activity indicators revealed a mixed picture, with factory output growing at the fastest pace since February 2022, while retail sales recorded their slowest growth since September. Investment growth remained sluggish.

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The persistent weakness in the property sector, which was once a key driver of China's economy, continued to impede the broader recovery. New home prices in December marked the sharpest decline since February 2015, with property sales and new construction starts also experiencing significant drops.

Despite market disappointment over the central bank's decision not to cut interest rates, analysts believe that more targeted measures may be considered to address the challenges in the property sector. The central bank had left the medium-term policy rate unchanged, citing pressure on the yuan currency as a limiting factor for broad-based monetary easing.

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Unemployment figures for December indicated a slight deterioration in the job market, with the survey-based jobless rate rising to 5.1 per cent  from November's 5.0 per cent . Recent data suggests that China's economy is entering 2024 on shaky ground, with persistent deflationary pressures and a modest increase in exports unlikely to provide a swift turnaround in factory activity. Concerns over longer-term growth prospects heightened as China's population declined for the second consecutive year in 2023, dropping by 2.75 million to 1.409 billion.

(With Reuters inputs)
 

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Published January 17th, 2024 at 08:58 IST