China’s economy grew faster than expected in the first quarter, data showed on Tuesday, offering some relief to officials amid efforts to maintain growth.

The government has released its fiscal and monetary policy measures in an effort to meet its 2024 GDP growth target of around 5%, which analysts have described as an ambitious goal, noting that last year’s growth rate of 5.2% was likely boosted by a rebound from 2022 – which faced limitations because of COVID-19.

GDP grew 5.3% in January-March year over year, according to data released by the National Bureau of Statistics. This was higher than analysts’ expectations in a Reuters survey of a 4.6% increase and slightly faster than the 5.2% expansion in the previous three months.

“The result is positive for the economy to hit its target. Momentum appears to be stable for now, evidenced by the March data not surprising on the upside,” said Jeff Ng, head of Asia macro strategy at SMBC in Singapore.

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“I think sentiments are still leaning bearish. I’m anticipating some reversal, possibly from the last quarter of 2024,” he added.

The GDP on a quarter-by-quarter basis grew 1.6% in the first quarter, which is higher than the 1.4% forecast for growth.

The Chinese economy, the second largest in the world, has struggled to see a strong and sustainable post-pandemic jump, as it has been hurt by a protracted property downturn, mounting local government debts and weak private-sector spending.

Fitch knocked its outlook on China’s sovereign credit rating to negative last week, pointing to risks to public finances as Beijing allocates more spending toward infrastructure and high-tech manufacturing amid a shift away from the property sector.

The government is counting on infrastructure work to help boost the economy as consumers are cautious of spending and businesses are lacking the confidence to expand.

China’s consumer inflation dipped more than expected in March, as producer price deflation continued.

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The economy was off to a good start in 2024, but March data on exports, consumer inflation and bank lending showed that momentum could see a drop.

Separate data on factory output and retail sales, which was released alongside the GDP report, also showed slowing momentum.

Industrial output in March grew 4.5% year over year, compared with a forecast increase of 6% and a gain of 7% for the January-February period.

Growth of retail sales increased 3.1% in March year over year, compared with a forecast increase of 4.6% and slowing from a 5.5% increase in the January-February period.

Fixed asset investment grew an annual 4.5% over the first three months of 2024, compared with expectations for a 4.1% increase. This expanded 4.2% in the January-February period.

“On the face of it, the headline number looks good… but I think the momentum is actually quite weak at the end,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore.

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The crisis in the property sector has been a major setback for China’s economy as it has rippled across business and consumer confidence, investment plans, hiring decisions and stock prices.

The People’s Bank of China has vowed to boost policy support for the economy this year.

Analysts expect further reductions in banks’ reserve requirement ratio and interest rates.

As the Federal Reserve and other developed economies show no urgency to start cutting interest rates, China may also face a longer period of subpar export growth in a further setback to policymakers’ efforts to engineer a strong economic recovery.

Reuters contributed to this report.

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