BEIJING: China is expected to report a sharp deterioration in economic activity in March as COVID-19 outbreaks and lockdowns hit consumers and factories, although first-quarter growth may have perked up due to a strong start early in the year.
Separate data on March activity, especially retail sales, is likely to show an even sharper slowdown, analysts say, hit hard by China's strict efforts to contain its biggest COVID-19 outbreak since the coronavirus was first discovered in the city of Wuhan in late 2019. The move was largely expected after the State Council said on Wednesday that monetary policy tools - including cuts in banks' reserve requirement ratios - should be used in a timely way.
"In the run-up to the Party Congress, we think the central bank will prioritise growth, especially as the COVID-19 battle drags on and housing markets fail to rebound," analysts at Barclays said in a note. The Reuters poll forecast China's growth to slow to 5 per cent in 2022, suggesting the government faces an uphill battle in hitting this year's target of around 5.5 per cent.
The government has unveiled more fiscal stimulus this year, including stepping up local bond issuance to fund infrastructure projects, and cutting taxes for businesses.