China’s economy grows 5% in the first quarter of 2026 despite the war in Iran and global risks

The Chinese economy accelerated in the first quarter, growing 5% year-on-year, despite the impact of the war in Iran, according to data released this Thursday, 16th, by the authorities.

Data for the period between January and March, which covers the beginning of the conflict, exceeded economists’ expectations and were above the 4.5% recorded in the previous quarter.

Analysts consider that China should resist the short-term impacts of the war, which is entering its seventh week, but warn of medium-term risks, including the slowdown in global demand for Chinese exports.

Rising energy prices, driven by conflict, are putting pressure on inflation and global economic growth.

The International Monetary Fund this week revised down China’s growth forecast to 4.4% in 2026. Last month, Chinese authorities set a growth target of between 4.5% and 5% for this year, the lowest since 1991.

“China can probably absorb short-term disruptions, but a prolonged war and longer-term high energy prices are likely to start hurting growth in the second half of the year,” said Lynn Song, chief economist for Greater China at ING Bank.

The prolonged crisis in the real estate sector continues to affect consumer and investor confidence, although the country achieved 5% growth last year, supported by robust exports that raised the trade surplus to a record level of around 1.2 trillion dollars (more than one trillion euros), despite tariffs imposed by United States President Donald Trump.

“The absence of a quick resolution to the war in Iran is expected to penalize global growth, which will negatively affect the ability of other economies to absorb Chinese exports,” said Eswar Prasad, professor at Cornell University, cited by the Associated Press.

On Tuesday, China announced that exports grew 2.5% in March, year-on-year, slowing down compared to the previous two months.

According to Prasad, in a context in which countries seek to protect their economies from the effects of the conflict, “the demand for Chinese imports is clearly decreasing”.

Economists consider that China could still achieve its growth target this year, “between 4.5% and 5%”, through political stimuli, but warn that an increase in public investment could intensify deflationary pressures and reinforce dependence on exports, if domestic demand does not recover significantly.