Oil prices moved in different directions today after the announcement of 2022 GDP data from China, eagerly awaited by the oil market.
The data showed that China's economy expanded by 3 percent, which, although undoubtedly a positive figure, was taken by some to be bad news because it was the weakest GDP figure in almost 50 years, according to Reuters.
Brent crude was up soon after the release of the data, and West Texas Intermediate was down, both modestly, with more pronounced changes possible later in the day.
The 2022 GDP growth figure was substantially lower than what the Chinese government had aimed for, at 5.5 percent, but expectations are that the growth engine of Asia will stage a recovery this year.
The growth figure for the last quarter of last year reinforced these expectations. Although modest, at 2.9 percent, fourth-quarter growth topped expectations, which pegged it at 1.6 percent because of Beijing's zero-Covid policy, which hobbled economic activity throughout the year.
"The Chinese economy is at a pivotal point, with disruptions from the protracted zero-Covid policy and its abrupt reversal likely to give way to a resurgence of at least moderate growth by Chinese standards," Eswar Prasad, an expert on China finance from Cornell University, told the FT.
"Growth momentum coming out of this difficult period will depend on how much and what kind of stimulus the government employs to put the economy back on track," he added.
"Businesses still face many difficulties in production and operation, scientific and technological innovation is not strong enough, and people still have considerable difficulties in employment," the director of China's national statistics bureau, Kang Yi, said, as quoted by CNBC. "We still need to make strenuous efforts to promote overall economic improvement."
Chinese demand has become the top bullish factor for oil prices lately, as the country is the largest importer of the commodity.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
And while a growth rate averaging 3% in 2022 is undoubtedly positive in the current global economic circumstances, it is still lower than the 5.5% that the Chinese government was aiming to achieve. However, China’s economy will always surprise the world by the speed it recovers in 2023.
Whatever, growth rate China achieves it will continue to drive the global economy long into the future with global oil demand being no exception.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert