BEIJING, (Reuters) – Profits in China’s industry firms grew faster than expected, despite negative economic effects from COVID-19 and the war in Ukraine, according to official data on Wednesday.

According to Reuters, profits in March rose 12.2% compared with year ago according to calculations based off data from National Bureau of Statistics (NBS).

Profit growth increased from the start of the year. The January-February combined industrial profits were 5% more than the year before.

According to NBS, January-March saw an 8.5% increase in industrial firm profits compared to the previous year, and a decrease of 3.8 percentage points when compared with 2021’s last quarter.

China’s Gross Domestic Product grew by 4.8% from the previous year, exceeding analysts’ expectations. It also accelerated from 4.0% during the fourth quarter.

But, March saw a slowdown of the second-largest global economy. Anti-COVID policies had a significant impact on consumption, real estate, and exports, raising concerns that there may be rising recession risks.

The economy’s main driver, exports, saw a 14.7% increase in March compared to a year ago. This is a slowdown from the 16.3% growth in January-February.

Analysts predict a worsening outlook for trade in April. They point to severe congestion in port operations and road transport due to restrictions imposed by COVID.

Shanghai is China’s largest city and financial center. The lockdown has been in place for a month. By April, Beijing had reported dozens COVID cases every day. Beijing’s government expanded mandatory testing on Monday to include a total population of 20,000,000 people.

Geopolitical risk, which includes Russia’s attack in Ukraine, has created uncertainty about global supply chains. It also disrupted commodity markets. This creates more problems for manufacturing.

Wang Yiming (a member of China’s Monetary Policy Committee of People’s Bank of China) stated that China needs to take steps in order to lessen the negative economic effects of COVID-19, and increase the annual growth rate above 5%.

Industrial profit data is for firms that generate more than 20 million yuan annually from their main operations.