2023-10-08 12:48:43
American banks, including Citigroup and JP Morgan Chase, raised their expectations for the growth rate of China’s economy to 5% during 2023, as the recent improvement in data helps build a consensus regarding the government’s ability to achieve the gross domestic product target.
JPMorgan economists led by Joe Haibin wrote in a note that improved activity data since August “suggest that the economic slowdown since April has likely bottomed out and the economy is beginning to change course.” They added that this trend, along with additional policy support such as monetary easing, “appears to have put the economy back on track” to meet the official growth target of regarding 5%. Citigroup raised its forecast for China’s economic growth rate from 4.8%.
Economists at Citigroup wrote that retail sales and industrial production in China may improve, and they added that the country’s recent export contraction may also diminish, following official manufacturing data reported an expansion for the first time in six months. “We have reached the cyclical bottom, and all eyes are on whether underlying demand will rise on increasing policy momentum,” economists led by Yu Xiangrong wrote.
Citigroup had previously expected that China’s economy would record a growth rate of 4.7%. Which makes it among the most pessimistic investment banks regarding China. Economists at Citigroup said that since the end of August, “policy momentum has clearly exceeded expectations.” Thanks to some facilitation measures in the real estate sector.
The latest Bloomberg poll of economists showed average growth expectations at 5% during 2023. Many companies lowered their estimates for the economy from expectations issued earlier in the year, as the real estate crisis led to a slowdown in activity for a longer period than expected.
Sales at major retail stores and restaurants in China rose 8.3% in the first three days of the holiday compared to the same period in 2022 when several regions faced restrictions due to the coronavirus, China Central Television reported, citing data from the Ministry of Commerce.
The value of new home sales at China’s 100 largest developers fell 29% year-on-year in September, according to China Real Estate Information, only slightly improving from a 34% decline in August. Christy Hong, an analyst at Bloomberg Intelligence, wrote in a research note that the numbers “may indicate the need to strengthen stimulus policy following a wave of support measures did not do much to revive confidence.”
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