What's going on?

Data out this week showed that China�s economy grew by more than expected last quarter, but its explosive start to the year has already started to peter out.

What does this mean?

China was firing on all cylinders at the start of the year: investment in manufacturing and infrastructure was up by 16% and 9% last quarter compared to the same time in 2021, while industrial production � a key driver of China�s post-pandemic recovery � rose by a better-than-expected 5%. That helped the economy grow by a better-than-expected 4.8%.

But here�s the thing: those numbers were mainly down to the first two months of the year, and there are signs that the country�s late-March lockdowns are now starting to hit consumers. The unemployment rate hit its highest level in March since May 2020, while retail sales fell 3.5% from the year before � more than twice the drop economists were expecting. And they think it�s only going to get harder from here�

Why should I care?

The bigger picture: China throws mud against a wall.
The way things are going, it�s a tough ask for China to meet its aim to grow its economy by 5.5% this year. That might be why the country�s central bank announced a laundry list of economic support measures this week to set it back on track � everything from delaying loan repayments, to supporting local infrastructure investments, to making it easier for domestic businesses to borrow overseas.

Zooming out: Ah geez.
China�s slowdown is reflective of a much bigger problem: The World Bank cut its forecast this week for global economic growth this year from 4.1% to 3.2%, due to the impact of Russia�s invasion of Ukraine (tweet this). It didn�t rule out further cuts either, and said it�s planning to roll out $170 billion worth of support � to help food shortage-hit countries, support those that have taken in refugees, and more � over the next 15 months.