GDP likely to grow by about 5% in 2022
GDP rose 8.1% y/y in 2021, and increased 10.6% from 2019. Growth rates across quarters in 2021 were similar, and growth was only slightly higher in Q2. But industrial growth declined. This indicates further growth pressure, especially when Omicron outbreaks are leading to frequent city closures, and calls for more monetary policy easing.
Investment grew only 4.9%, far less than in normal years. The adjusted growth rate should be even lower. Consumption is weak. Social consumption goods retail sales rose 8.1% from 2019, and increased 4.9% after taking out the price factor, with an annual growth rate of 2.4%. Strong trade is the major growth factor. Exports rose 21.4% from 2020, and imports rose 21.5%. Both increases are the highest since 2014.
Producer prices boomed in 2021, but since October have ended their appreciation. In December, the ex-factory price index and PPI fell -1.2% and -1.3% m/m, and their y/y growth rates have fallen to 10.2% and 14.2%. We forecast that the PPI’s fast appreciation period has ended. CPI was still low, and grew 1.8% y/y in Q4, but is expected to pick up in 2022, constraining further monetary easing. Monetary policy displayed a contracting trend in first three quarters of 2021. But in Q4 there were some signs that monetary policy is loosening. M1 growth rebounded to 3.5%, from 2.8% at the end of October. The M2 growth rate rebounded to 9% y/y.
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