The recovery in the first quarter was better than expected, but the downward pressure on the economy remained unchanged. In the first quarter of 2022, China’s nominal GDP reached 27.0 trillion yuan, higher than the linear trend of nominal GDP in the first quarter since 2011. From the perspective of real GDP growth, the year-on-year growth rate in the first quarter of 2022 reached 4.8%, higher than Bloomberg market expectation (4.2%); After the quarter on quarter adjustment, the growth rate was 1.3%, down 0.3 percentage points from the fourth quarter of 2021, indicating that the economic recovery has a certain toughness, but the overall trend is slowing down.
The epidemic dragged down the economic recovery in the second quarter, and the pressure of “steady growth” increased in the second half of the year. At present, the epidemic situation is continuing to affect the Yangtze River Delta centered on Shanghai. The epidemic prevention and control has reduced the logistics efficiency in many places, which has not only dragged down production activities, but also restrained residents’ consumption. We believe that the epidemic delayed the recovery process, and it is expected that the bottom of the economy will be extended to the second quarter. Considering the growth rate of 4.8% in the first quarter, the actual GDP growth rate in the remaining three quarters needs to reach 5.7% in order to achieve the annual growth target of 5.5%. The epidemic has limited the space for economic growth in the second quarter, so more “steady growth” measures are needed in the second half of the year.
Better balance epidemic prevention and control and “expanding domestic demand”. As we pointed out in the macroeconomic outlook for 2022, with the return of fiscal and monetary policies to normal, the contribution of capital formation to economic growth will pick up, and the role of infrastructure investment in promoting the economy will increase. However, the marginal adjustment of epidemic prevention and control will affect the recovery of consumption engine and further determine the realization degree of “expanding domestic demand” strategy and the annual economic growth level.
