Solid Q1 GDP growth at 5.3%; Yet Activity Slowed Notably in March

• China's Q1 24 GDP surpassed expectations, growing by 5.3% year-on-year. Seasonally adjusted, the economy expanded at a solid pace of 7.4% quarter-on-quarter, compared to 5.8% in the previous quarter.
• Despite strong Jan-Feb activity, economic momentum moderated in March, with industrial production and retail sales growth below expectations.
• Fixed investment exceeded expectations, driven by policy support boosting manufacturing and infrastructure investment, despite weakness in real estate investment.
• Despite a marginal decrease in the urban unemployment rate, the manufacturing sector's outperformance didn't translate into significant employment growth. Revised down Q2 GDP growth forecast to a 4.0% quarter-on-quarter seasonally adjusted rate, with unchanged forecasts for the second half and full-year 2024. Additional stimulus is unlikely due to stronger-than-expected 1Q GDP, while structural imbalances in the economy persist, affecting demand-supply dynamics and inflation pressures.

(Source: JPMorgan)