By Kevin Yao
BEIJING, April 13 (Reuters) - China's economy likely regained some momentum in the first quarter on solid exports, but growth is expected to cool over the rest of 2026 as the Middle East crisis threatens to choke corporate profits and sap overseas demand, a Reuters poll showed.
Gross domestic product growth in the first quarter is forecast at 4.8% from a year earlier, quickening from a three-year low of 4.5% in the October–December quarter, a Reuters poll of 50 economists showed.
Growth
is expected to slow to 4.7% in the second quarter, dragging the full-year expansion to 4.6% in 2026 from last year’s 5.0%, according to the median forecast in the poll, broadly in line with the official target of 4.5%–5.0%.
China has so far absorbed the economic shock from the Iran war with limited disruption, cushioned by large oil reserves, a diversified energy mix and tight price controls. But economists warn that persistently higher oil prices are already lifting input costs and squeezing profits at a time when domestic demand remains weak.
China's exports, a key pillar of growth, could falter if the conflict nL6N40V09S drags on and undermines the global economy, they added.
"Higher oil prices would hit China’s economy through terms of trade shock and downstream margin squeeze," analysts at Morgan Stanley said in a note.
"But unlike many other net oil importing countries, which face production disruptions owing to energy shortage and constrained policy space amid elevated inflation, China is better positioned."
Strains are nonetheless starting to show. China's factory‑gate prices nL1N40T01H rose in March for the first time in more than three years, an early signal that energy-driven cost pressures are seeping into the world's second-largest economy and threatening already thin corporate margins.
Data due out on Tuesday are expected to show China's export growth nL1N40W02I cooled in March as buyers chasing an AI-fuelled future confront the hard reality of war in the Middle East.
On a quarterly basis, the economy is forecast to grow 1.3% in January-March, compared with 1.2% growth in October-December, the poll showed.
The government is due to release first quarter GDP data, along with March activity data, at 0200 GMT on April 16.
MODEST STIMULUS
Beijing has set a budget deficit of about 4% of GDP for 2026 and lined up heavy bond issuance to support growth, while the central bank has pledged to keep policy accommodative despite having limited room to cut rates as inflation edges higher.
"With the 2026 growth target set at 4.5–5%, a strong first-quarter print should give policymakers room to hold off major stimulus at the late-April Politburo meeting despite Middle East-related energy risks," analysts at Societe Generale said in a note.
The Politburo, a top decision-making body of the ruling Communist Party, is expected to meet later this month to assess the economic outlook.
Policymakers have acknowledged an "acute" imbalance between strong supply and weak demand, vowing to "significantly" lift household consumption's share of the economy over the next five years, though no specific target has been set.
Analysts polled by Reuters see the central bank keeping the benchmark one‑year loan prime rate unchanged through the end of 2026, while cutting banks’ weighted‑average reserve requirement ratio by 20 basis points in the third quarter of the year.
Consumer inflation is forecast to quicken to 1.0% in 2026 from flat growth in 2025, before steadying in 2027, the poll showed.
(Other stories nL1N40L04Q from the Reuters global economic poll)
(Polling by Renusri K and Rahul Trivedi in BENGALURU and Jing Wang in SHANGHAI;Reporting by Kevin Yao;Editing by Shri Navaratnam)
