Industrial production, fixed asset investment and trade surplus are important supports for GDP growth in the first quarter. Fiscal revenue decreased and expenditure increased, the pace of expenditure accelerated, and continued to tilt towards infrastructure.
Quarterly economic and financial data were released on Monday. The economic data in the first quarter were greatly affected by the conflict between Russia and Ukraine and the epidemic situation. Although the actual GDP growth rate in the first quarter was in line with market expectations, considering that the market lowered expectations after the outbreak of the conflict between Russia and Ukraine at the end of February, the overall economic growth rate of 4.8% was weak. Compared with the higher than expected economic data from January to February, the economic data in March not only reflected the impact of the conflict between Russia and Ukraine, but also included the impact of the Chinese epidemic on the economy. From the growth rate of the current month, the consumption growth rate decreased significantly, the growth rate of industrial added value decreased significantly, and the growth rate of real estate investment was still looking for the bottom. In contrast, the high growth rate of manufacturing investment and the rise in the growth rate of infrastructure investment were the highlights of the economic data in March. On the whole, the market has obviously underestimated the impact of the epidemic on consumption, and the negative impact of the epidemic on the production side is greater than the market expectation. Consistent with the market expectation, infrastructure investment is an important means to underpin economic growth, and the margin of real estate policy is also being relaxed. We believe that industrial production, fixed asset investment and an unexpected trade surplus are important reasons to support GDP growth in the first quarter.
Fiscal revenue decreased and expenditure increased, the pace of expenditure accelerated, and continued to tilt towards infrastructure. In the first quarter, the national general public budget expenditure increased by 8.3% year-on-year, 1.3 percentage points higher than that from January to February; Over the same period, the general public budget revenue was 6203.7 billion yuan, a year-on-year increase of 8.6%, 1.9 percentage points lower than that from January to February.
Fiscal expenditure in the first quarter continued to tilt to the field of infrastructure. In the first quarter, the public budget expenditure on urban and rural communities increased by 7.5% year-on-year, narrowed by 0.1 percentage points compared with the previous February, and was basically flat. Public finance expenditure on agriculture, forestry and water increased by 8.4% year-on-year, an increase of 3.9 percentage points over the previous February, corresponding to the higher growth rate of water conservancy project investment in the first quarter. The scale of public financial expenditure on transportation was 325.9 billion yuan, with a year-on-year increase of 10.9%, which was 3.1 percentage points lower than that in the previous February. The epidemic had an impact on the operation and investment of transportation and logistics related industries, but the certainty of infrastructure investment continued to be strong during the year. In addition, the use and investment of special bond funds also continued to tilt to the field of infrastructure investment.
Overseas, the US and European central banks released different signals on "tightening" this week. In the United States, several Fed officials released the signal of "accelerating the pace" this week. When attending the IMF event on Thursday, US Federal Reserve Chairman Powell said that it is appropriate to "raise interest rates in advance" and slightly speed up the pace of action. On the same day, Daley, President of the Federal Reserve Bank of San Francisco, said that policymakers may raise interest rates by 50bp at several meetings and start the table reduction plan at the same time. While strengthening the expectation of continuous interest rate increase of 50bp, the market's expectation of interest rate increase of 75bp at the meetings in May and June has also increased.
In Europe, the ECB maintains the "partial Dove" tone as a whole. On Thursday, IMF European Central Bank President Lagarde said that the European Central Bank's meeting in June was the time to decide the next action based on new data. She reiterated that the speed of the eurozone economy was different from that of the United States, and the response to inflation was also different, claiming that the European Central bank's policy was more "normalization" than "tightening". In March of the week, the final value of CPI in the eurozone was revised down from the initial value, from 7.5% to 7.4% year-on-year, but it still reached a record high, and inflation will eventually be a problem that the eurozone has to face.
Risk tip: global inflation is rising too fast; Liquidity flows back to US debt; The global covid-19 epidemic has expanded its impact.
