China has kicked off the year with positive economic growth as its gross domestic product (GDP) expanded by 5.3% in the first quarter.

However, beneath this headline figure lies a story of both resilience and vulnerability as mixed data signals suggest that the road ahead may not be smooth sailing for the world’s second-largest economy.

The latest figures released by the National Bureau of Statistics indicate that China’s economy experienced a slight acceleration from the previous quarter, surpassing analyst estimates.

Much of the growth momentum was concentrated in the early months of the year with March painting a more subdued outlook.

In March, growth in retail sales slumped and industrial output decelerated below forecasts, pointing towards potential challenges on the horizon.

Xiaojia Zhi, Chief China Economist at Credit Agricole, said “Markets may find it hard to be convinced by the strong GDP growth print and difficult to reconcile with the mixed March data.”

Concerns linger that policymakers may become complacent if GDP growth remains above 5%, potentially stalling further policy easing measures.

China’s economic landscape is a tale of two narratives. On one hand, manufacturing remains resilient, buoyed by robust overseas demand and Beijing’s emphasis on fostering advanced technologies domestically.

However, a prolonged real estate crisis coupled with factory prices in deflation for over a year underscore the fragility of domestic demand and excess capacity in certain industries.

The response from economists has been varied but generally optimistic. DBS Group Holdings Ltd raised its forecast for China’s annual growth from 4.5% to 5% following the release of the data, aligning it with the government’s annual target.

Nathan Chow, Senior Economist at the bank, cited stronger-than-expected US demand and improvements in the labor market as reasons for the upgrade.

Despite the encouraging GDP figures, challenges persist. Philipp Hildebrand, Vice Chairman at BlackRock Inc., highlighted the lack of domestic demand and deflationary pressures as significant hurdles.

Moreover, tensions with major trading partners, particularly the US and Germany, have escalated, with concerns over an influx of cheap exports.

Looking ahead, policymakers face the daunting task of stabilizing the property market and stimulating consumer spending.

Efforts such as a proposed trade-in program aim to boost domestic demand by incentivizing businesses and households to invest in new machinery and appliances.

However, monetary policy support may be constrained by the robust performance of the US economy. With the likelihood of a US Federal Reserve rate cut diminishing, China’s central bank may have limited room for further easing.

Nonetheless, the recent loosening of the grip on the Chinese yuan suggests a degree of flexibility in response to evolving economic conditions.

China’s economic growth in the first quarter may have surpassed expectations, but the challenges ahead require proactive measures to navigate.

As the nation strives to maintain momentum amidst a complex global landscape, policymakers and market participants alike remain vigilant, aware that the path to sustained growth may require careful navigation through turbulent waters.

Economic uncertainty in Africa’s largest economy, Nigeria, continued to push inflation higher in March despite efforts to ease rising consumer prices.

The Consumer Price Index, which measures the inflation rate, quickened to 33.20 percent in March, according to the latest report from the National Bureau of Statistics (NBS).

This represents an increase of 1.50 percent from 31.70 percent reported in February.

On a yearly basis, the inflation rate was 11.16 percent higher when compared to the 22.04 percent filed in March 2023, indicating a broad-based increase in headline inflation.

However, on a month-on-month basis, the headline inflation rate increased at a slower pace in March compared to the previous month. In March, the inflation rate stood at 3.02%, while in February, it was 3.12%

Food Inflation

Prices of food items increased at 40.01% year-on-year basis in March 2024 from 24.45% achieved in March 2023.

The National Bureau of Statistics (NBS) attributed the increase to the rise in prices of the following items Garri, Millet, Akpu Uncooked Fermented (which are under the Bread and Cereals class), Yam Tuber, Water Yam (under Potatoes, Yam, and other Tubers class), Dried Fish Sadine, Mudfish Dried (under Fish class), Palm Oil, Vegetable Oil (under Oil and Fat), Beef Feet, Beef Head, Liver (under Meat class), Coconut, Water Melon (under Fruit Class), Lipton Tea, Bournvita, Milo (under Coffee, Tea and Cocoa Class).

On a monthly basis, the food inflation rate grew at a slower rate of 3.62 percent in March, a 0.17 percent decrease compared to the 3.79 percent recorded in February 2024.

The fall in Food inflation on a Month-on-Month basis was caused by a fall in the rate of increase in the average prices of Guinea corn flour, Plantain Flour etc (under Bread and Cereals class), Yam, Irish Potatoe, Coco Yam (under Potatoes, Yam & Other Tubers class), Titus fish, Mudfish Dried (under Fish class), Lipton, Bournvita, Ovaltine (under Coffee, Tea and Cocoa class).

The average annual rate of Food inflation for the twelve months ending March 2024 over the previous twelve-month average was 31.40%, which was 8.69% points increase from the average annual rate of change recorded in March 2023 (22.72%).

The Federal Government has made a direct appeal to the National Union of Electricity Employees (NUEE) amidst rising tensions over the recent hike in electricity tariffs.

The plea comes as the union continues to voice its dissatisfaction with the government’s decision to remove the subsidy on the tariff payable by Band A customers, warning of potential service withdrawal if the decision is not reversed.

In an interview with our correspondent, Adebiyi Adeyeye, the National President of the NUEE, reiterated the union’s stance against the increase, citing the impracticality of expecting their members to collect higher tariffs from customers without a proportional improvement in service.

Adeyeye emphasized the union’s concerns over the discrepancy between the promised 20 hours of daily power supply and the actual delivery, which he deemed “not feasible” due to existing infrastructural limitations.

The Federal Government, represented by Minister of Power Adebayo Adelabu, called for understanding and patience from the union. Speaking through his media aide, Bolaji Tunji, Adelabu assured that efforts were being made to improve electricity supply across the nation. He emphasized the necessity of these changes for the country’s long-term economic growth and job creation.

“We just want to appeal to the labor union to understand the context of these changes. It’s about working together to address the underlying issues within the power sector. It is not anybody’s joy that there are blackouts all the time,” Adelabu stated.

He added that the steps being taken would ultimately benefit the economy and urged the union to bear with the government during this transitional phase.

Adeyeye maintained that the union’s primary objective is to safeguard the well-being of its members, who are facing increased threats due to the tariff hike.

He stressed the need for immediate action from the government to resolve the issues, stating that the union would withdraw its services if necessary.

As the standoff continues, the public watches with interest, hoping for a resolution that will avoid disruptions to the country’s power supply and maintain a harmonious relationship between the government and electricity workers.