Traders, who were expecting eight per cent expansion, rattled equity markets and contributed to the slump in gold prices yesterday.
A raft of data out of Beijing yesterday morning also showed March industrial output growing 8.9 per cent from a year earlier, against expectations for 10 per cent, and retail sales rising 12.6 per cent versus estimates for 12.5 per cent.
Fixed-asset investment grew 20.9 per cent in the first quarter from a year earlier, lower than forecasts for 21.3 per cent.
But China’s real estate investment soared 20.2 per cent in the first quarter from the same time last year, while revenues from property sales were up 61.3 per cent.
Despite jitters in the markets over the health of the world’s top metals consumer, some economists said they remained confident in China’s growth prospects.
“Markets will surely be disappointed by these poor readings, but we believe growth could rebound slightly in [the second quarter] on regained confidence and supportive policies,” said economists at Bank of America Merrill Lynch, who said the fall was partly driven by a crackdown from the nation’s new leadership on the more lavish elements of government spending.
Gary Dugan, chief investment officer Asia and Middle East at Coutts, said the strength of growth in the coming quarters will depend on the government’s response to the disappointing figures.
“The new administration has stated four main policy objectives: stabilising growth, preventing inflation, controlling risks and promoting economic reforms,” he said in a note.
“At this point, new stimulus measures look unlikely, but fine tuning on certain tightening policy seems plausible, particularly with inflationary pressures still limited.”