(Yicai Global) April 3 -- China’s economy will grow by 7.6 percent this quarter, accelerating from an estimated 4.1 percent gain in the first three months of the year, according to a new forecast from the Bank of China Research Institute. 

The impact of the pandemic on China’s economy and society will diminish further in the second quarter and consumption will continue its recent increase, the think tank said in a report published today. 

Investment in infrastructure and the manufacturing sector will also continue growing at a faster pace, while investment in real estate is expected to stabilize and the decline in exports should narrow further. The low base of comparison is also a key reason for the stronger GDP growth in the second quarter.

There will be less pressure for the People’s Bank of China, the country’s central bank, to lower interest rates because of the continuous economic rebound, and the policy rate is predicted to remain unchanged this quarter, the report said. The financing environment will remain relatively loose and M2 money supply and social financing will maintain their growth trajectory. 

The research institute estimated China’s first-quarter GDP growth at 4.1 percent, with the recovery bolstered by adjustments to the country’s Covid-19 policies, and the revival of economic activity in the first two months. Especially after the lunar new year break in late January, companies picked up the pace amid a rise in demand, while employment and prices stabilized and market confidence returned, it said.  

China’s housing market also saw a modest improvement in the first quarter. According to data from the National Bureau of Statistics, commercial housing sales fell by 0.1 percent year on year in the first two months, with the decline narrowing by 19.2 percentage points from the same period last year. Investment in property development dropped 5.7 percent annually, 4.3 points less than the decline seen in the whole of last year. 

Further observation of the continuity in the housing market’s recovery will be needed and the authorities should strengthen policy support for developers’ fundraising and for homebuyers, while revoking the unreasonable restrictions on house purchasing and loans, the report said.

It also urged expansion in the supply of affordable rental housing to tackle accommodation-related issues affecting young people and for those facing difficulties finding homes in large cities.

Editors: Dou Shicong, Tom Litting