China's Blowout GDP Calms Markets Shaken by Global Turmoil

(MENAFN) Stronger-than-expected Chinese economic data offered global markets a measure of relief Thursday, as easing tensions in the Middle East and falling oil prices helped temper fears over the health of the world economy — even as the ripple effects of the ongoing US-Israeli conflict with Iran continue to weigh on corporate and macroeconomic outlooks.

China's economy expanded 5% year-on-year in the first quarter of 2025, matching Beijing's revised annual growth target of 4.5–5%, according to the National Bureau of Statistics (NBS). On a quarter-on-quarter basis, the economy grew 1.3% — a figure that, alongside softening oil prices and advancing ceasefire diplomacy, helped restore a degree of investor confidence.

The reading marks a slight deceleration from last year's full-year growth of 5%, a pace that had already prompted Beijing to lower its annual target from the previous 5% threshold. In the fourth quarter of last year, the economy had expanded 4.5% annually.

The International Monetary Fund (IMF) has since trimmed its China growth forecast for the emerging and developing economies category — from 4.5% to 4.4% for 2026 — while holding its 2027 projection steady at 4%.

Sadi Kaymaz, an Asia markets analyst, told media that first-quarter figures tend to be buoyed by advance purchasing activity, and that second-quarter numbers often follow a similarly firm trajectory.

"But issues could still come to the fore in the second quarter, so one shouldn't get too carried away by expectations," he warned.

Kaymaz painted a picture of a Chinese economy where supply continues to outpace demand. Industrial output beat forecasts, while consumer spending fell short.

"Industrial production grew 5.7% in March, some 0.4 percentage points above estimates, while the first-quarter rate was a 6.1% growth," he said. "On the export side, high-tech growth surged 15% on an annual basis, but on the retail side, sales in March climbed 1.7% year-on-year, below the 2.4% expectation.

"Car sales fell around 8% on an annual basis in the first quarter, as the subsidy for trading in old vehicles has been discontinued at the start of the year, particularly impacting the budget car segment; meanwhile, construction materials and furniture markets are still struggling as they are both reliant on the housing market," he added.

Kaymaz further flagged that unemployment data came in above expectations, and that the property sector remains a drag — with new home prices contracting 0.21% month-on-month and existing home prices slipping 0.24% in March, even as secondary market activity showed tentative signs of recovery in select major cities.

Arjen van Dijkhuizen, senior economist at ABN AMRO, noted that the mild pickup in China's real GDP growth was broadly in line with expectations, underpinned by a rebound in exports in February and a return to positive territory for fixed investments. He cautioned, however, that the recovery in investment likely only partially offset the war's economic drag at the close of Q1, and that structural imbalances — particularly the persistent gap between supply and demand — remain a concern going forward.

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