Covid-19 restrictions affect Chinese economy 1:05
Hong Kong (CNN Business) --
China's economy is off to a strong start in 2022, posting a growth rate that exceeded expectations.
But as the country grapples with a significant rise in Covid-19 and puts dozens of cities on lockdown, the coming months may bring more challenges.
China's gross domestic product grew 4.8% in the three months to March 31 compared with the same period last year, according to data released Monday by the country's National Bureau of Statistics.
That was faster than the 4% year-on-year rise the world's second-largest economy posted in the previous quarter, and also beat the 4.4% growth rate forecast by a Reuters survey of economists.
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The growth was fueled by surprisingly strong economic performance in January and February, with several economic indicators for those two months beating analysts' predictions.
But Beijing's efforts to curb its worst Covid-19 outbreak in two years have dealt a heavy blow to economic activity since March, including in the country's financial and manufacturing hub, Shanghai.
Many companies have been forced to suspend some operations, including carmakers Volkswagen and Tesla and iPhone assembler Pegatron.
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Nomura analysts estimate that nearly a quarter of China's population, and 40% of the economy, are now affected by full or partial lockdowns.
Chinese Premier Li Keqiang has repeatedly warned in the past week of the threat that rising Covid-19 cases pose to growth and jobs.
Last Wednesday, he promised more interest rate cuts to boost the economy.
Two days later, the People's Bank of China announced a cut in the reserve requirement ratio, which dictates the amount of cash banks must hold in reserves, a move intended to stimulate lending.
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The World Bank and some investment banks have recently lowered their forecasts for China's GDP growth in 2022, citing growing risks stemming from Beijing's adherence to its strict Covid-19 restrictions.
China's economy grew by 8.1% in 2021, exceeding the government's own targets.
But the pace of expansion slowed sharply in the last months of the year.
The government has set its growth target for 2022 at around 5.5%, the lowest in three decades.
Economic growth
