China’s economic growth unexpectedly lost momentum in the first quarter as gains in factory output and consumption weakened, driving stocks and commodities lower on concern global expansion will slow.
Gross domestic product rose 7.7% from a year earlier, the National Bureau of Statistics said in Beijing today. That compares with the 8% median forecast in a Bloomberg News survey of 41 analysts and 7.9% in the fourth quarter. March industrial production increased less than estimated while retail-sales growth matched forecasts.
Today’s data add to concerns the global recovery is struggling, with the International Monetary Fund set to lower its forecast for U.S. growth and investor George Soros warning that Germany will probably be in recession by the end of September. Moderating inflation may give new Premier Li Keqiang more room to boost domestic demand as the euro-area debt crisis clouds the outlook for exports.
“The disappointing data show the recovery is much weaker and bumpier than expected, dragged down by soft domestic demand,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. The expansion in credit so far this year may help growth pick up in the second quarter, and authorities may ease efforts to rein in so-called shadow banking while boosting spending in areas including health care and environmental protection, Zhu said.
JPMorgan today cut its 2013 growth forecast to 7.8% from 8.2%, while Royal Bank of Scotland Group Plc lowered its estimate to 7.8% from 8.4%.
The MSCI Asia Pacific Index of stocks dropped 0.8% at 4:06 p.m. in Tokyo, poised for the first decline in six days. China’s benchmark Shanghai Composite Index fell 1.1% at the close, the most this month. The S&P/GSCI Index of 24 commodities tumbled 1.4%, as oil declined 2.3% to $89.17 a barrel in New York.
First-quarter expansion was lower than all except two analyst estimates out of 41 ranging from 7.5% to 8.3%. October-December growth showed the first acceleration in two years, up from the third quarter’s 7.4% rate. For 2012, expansion was 7.8%, the least since 1999.
The statistics bureau characterized the economy in the first quarter as “stable,” with Sheng Laiyun, a spokesman, saying the expansion rate isn’t low compared with other nations. China’s new leadership is putting more emphasis on quality of growth, and urbanization will continue to create demand, Sheng said at a briefing in Beijing.
While the economy has had a smooth start to the year, China still faces a complex situation due to instability and uncertainty domestically and abroad, Premier Li said in comments published yesterday by the official Xinhua News Agency.