UpdateChina's GDP growth slows to 8.1% in first quarter of 2012

13 April 2012 06:40  [Source: ICIS news]

China textile factory in Shandong province(recasts lead, adds details throughout)

SINGAPORE (ICIS)--China’s economic growth softened to 8.1% in the first quarter of this year, down from 8.9% in the previous quarter, because of a decline in export growth, official statistics showed on Friday.

On a year-on-year basis, the country’s export growth fell to 8.9% in March, compared with the 18.4% increase in the previous month.

Despite the slowdown, analysts said China is likely to experience a “soft landing” in its economic expansion, with GDP growth expected at 8.0-8.5% this year on the back of improving external demand conditions.

“Though headline export growth will continue to moderate – compared with last year’s annualised 20.6% – the strength of China’s trade sector remains solid, given it is the world’s top exporter and global growth remains below potential,” said ANZ bank in a note.

China’s exports and imports rose by 8.9% and 9.8% year on year, respectively, in the first quarter of this year, resulting in a trade surplus of $670m (€509m). This compares with a trade deficit of $706m in the first quarter of 2011.

The country’s industrial output grew by 11.6% year on year in the three months to March, with total retail sales for the period up by 10.9% year on year, the National Bureau of Statistics (NBS) said.

The country recorded a 3.6% year-on-year rise in its consumer price index (CPI) and a 0.3% decline in its producer price index (PPI) in March.

China’s inflation has been effectively controlled and is not expected to rebound in the near term,” said economist Ding Yifan of the Development Research Center of the State Council.

“The country should concentrate on [its] macro policy and monetary policy and help to build investors’ confidence,” Ding added.

Citigroup economist Shen Minggao said: “China’s GDP growth is likely to fall below 8% in the second quarter if [the] PPI continues to drop.”

“It may take some time for the market to accept that China needs to grow slower in order to move forward in a more sustainable manner in the long run,” said Singapore-based DBS Group Research.

“It is likely that from now on, [China’s] macroeconomic policy will be geared towards resolving structural imbalances as opposed to generating short-term growth catalysts – unless the global economy collapses, of course,” it added.

($1 = €0.76)

With additional reporting by Rachel Yang

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Nurluqman Suratman

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