The Day at a Glance | April 18 2023

*China´s economy accelerated its pace of growth in the first quarter. 

*The Timely Economic Activity Indicator (IOAE for its initials in Spanish) expects the IGAE to increase in February. 

*Retail sales in China beat market expectations; while industrial production continued moving forward at a solid pace, although it remained below the figure expected by the consensus. 

*Speaker of the United States House of Representatives, Kevin McCarthy, pointed out that Republicans are planning to increase the debt ceiling without affecting social security, although he shared no details. Even though McCarthy´s comments seem positive, there is no bipartisan agreement through which Democrats believe that the debt ceiling should be increased with no conditions attached. Because of this, the proposal isn’t expected to be approved by the US Senate. 

Economic environment

China logged solid growth figures at the start of 2023. China made its growth figures public on Monday night, which logged a 2.2% quarterly rate of growth in the 1Q23, beating market estimates that forecasted a 2.0% figure (and set above the previous 0.0%). Similarly, a 4.5% annual rate was recorded – also above the 4.0% expected by the consensus and the 2.9% figure logged in the 4Q22. Additionally, industrial production and retail sales figures for March were made known. Industrial production increased 3.9% annual, below the expected 4.4%. Even though the year´s accumulated figures logged a 3.0% annual rate of expansion, they compared positively against the annual January-February figure of 2.4%. For their part, retail sales increased at a 10.6% annual rate in March, widely beating the 7.5% expected by the consensus. With this, retail sales accumulated a 5.8% with respect to the same period of last year, reflecting acceleration with respect to the January-February figure, which set at 3.5%. All in all, figures provide evidence that China´s economic rebound is underway and is being boosted by consumption, as shown by robust retail sales figures despite certain disparity. Even though there are positive figures in the 1Q23, Chinese officials pointed out that they don´t consider this rebound to be solid as the international context is still complex and demand is still insufficient. However, they do expect figures to improve in the second quarter of the year due to an increase in consumption. 

The IOAE expects the Global Economic Activity Indicator (IGAE for its initials in Spanish) to increase 4.2% in February. The new estimate implies a 0.7pp upwards revision with respect to what the IOAE revealed a month ago, when it expected a 3.5% increase. This revision was carried out mainly due to greater growth in secondary activities, which logged a 3.5% annual rate of growth in February (vs 2.9% annual e.), and in tertiary activities, which are now expected to increase 4.2% annual in February, 1.1pp greater than the previously expected 3.1%. Additionally, March´s IOAE forecasts a 3.8% annual rate of growth, mainly due to a 3.0% hike in secondary activities and a 4.2% rise in tertiary activities.