Danske Bank’s Danske Research Team observes that Chinese GDP and industrial production surprised to the upside, while retail sales remained weak and unemployment ticked higher. The bank notes that 5% GDP growth should reassure Beijing policymakers, who remain ready to add stimulus if the Iran war weighs more heavily, and that the data helped CNY strengthen slightly.

Solid growth and risk sentiment lift currency

"China released its monthly batch of data overnight, which continued to show a two-speed economy with weak consumer demand and strong exports/production. GDP increased 5.0% y/y in Q1 above expectations of 4.8% y/y, and industrial production beat expectations at 5.7% y/y (cons: 5.3% y/y) lifted by strong export growth."

"Retail sales for March disappointed growing only 1.7% y/y from an average of 2.8% y/y in the first two months of the year. The main good news came from house prices that fell -0.21% m/m, less than what we have seen lately, while the unemployment rate increased from 5.3% in February to 5.4% in March, the highest level since February last year. "

"The 5% GDP growth will give some comfort to policymakers in Beijing, but they will stand ready to provide economic stimulus over the coming quarters if the hit from the Iran war, to both exports and domestic demand, starts to get stronger. "

"The numbers added to the positive risk sentiment in Chinese stocks overnight and the CNY strengthened slightly."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)