China’s gross domestic product grew faster in the first quarter than was anticipated, with the transition to a services-based economy continuing, according to NAB.
The bank’s China’s Economy at a Glance report for April 2017 found that GDP grew 6.9 per cent year-on-year in the January quarter, marginally faster than the 6.8 per cent expected by markets based on the Thomson Reuters poll.
Growth in the services sector for the quarter came in at an above-average 7.7 per cent, NAB said, noting that services accounted for around 56 per cent of the country’s economy in 2015 prices.
Secondary industries such as manufacturing and construction grew 6.4 per cent year-on-year, faster than in 2016 but still slower than the average pace of growth, NAB said.
This decline in growth experienced by China’s secondary industries, “the core of China’s old economy”, is part of an ongoing transition to a new economy, the bank said.
This “strong” start to the year is “well above the government’s target of ‘around 6.5 per cent or higher if possible’”, the bank noted, and as such upside risk to forecasts remains.
“That said, the construction led boom across the middle of 2016 might result in some cooling in growth in coming quarters, and therefore our forecasts are unchanged, with growth of 6.5 per cent in 2017,” NAB said.
The bank’s GDP forecast for China in 2017 is 6.5 per cent, followed by 6.25 and 6.0 per cent in 2018 and 2019 respectively.