Investments in China's 3 core growth engines hint at rising recessionary pressures

Goldman Sachs economist sees soft start to Q2; Nomura economist says high-frequency data suggests sharp decline in activity due to ongoing Omicron waves, lockdowns

Angela Tan

Published Thu, Apr 21, 2022 · 05:50 AM

China economy

CHINA'S first-quarter economic growth turned out better than expected, but analysts say investments in the 3 core growth engines - infrastructure, manufacturing and real estate development - tell a less-sanguine story and hint at rising recessionary pressures.

On Wed (Apr 20), China and Hong Kong markets continued their second consecutive day of decline, even though Beijing reported on Monday that China's Q1 gross domestic product (GDP) grew 4.8 per cent on year, exceeding median street expectations of 4.2 per cent.

Sentiment took a hit after the International Monetary Fund (IMF) affirmed expectations that China will miss its official growth target of about 5.5 per cent this year. It cut China's 2022 GDP growth estimate to 4.4 per cent, from 4.8 per cent on concerns that Beijing's strict zero-Covid policy could continue to hamper economic activity.