BlackRock Investment Institute

Macro insights

China's growth slowdown in context

Recent softening in China's economic data should be seen in the context of overall activity levels that have already surpassed pre-Covid trend expectations. Moderating growth in China is unlikely to derail global growth momentum, in our view, as the restart broadens out in the U.S. and Europe.  

Moderating growth

Chart showing the path of China's GDP

Forward looking estimates may not come to pass. Sources: BlackRock Investment Institute, Reuters Polls, IMF, with data from Haver Analytics, May 2021. Notes: The chart shows the actual and estimated real GDP for China, indexed to 100 in the first quarter of 2019. The solid orange line shows the path of actual real GDP and the dotted orange line shows consensus expectations of real GDP according to the latest Reuters poll. The dotted yellow line shows the level of estimated GDP according to the IMF's October 2019 World Economic Outlook.

China’s post-Covid activity restart has been swift, as shown in the chart. GDP data for the first quarter of 2021 show that activity was already above pre-Covid trend estimates – a milestone China hit much earlier than projections for developed economies. Consensus expectations for 2022 point to a moderation in year-on-year growth rather than a material slowdown.

The rest of the world has already benefitted from China’s growth spillovers. The boost has also coincided with the vaccine-led restart in domestic activity in developed economies. We see the strength in domestic business investment spending putting Western economies on a path to return to pre-Covid trends on a sustained basis.

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Elga Bartsch
Head of Macro Research
Read bio
Nicholas Fawcett
Macro Research

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