Data showing China’s post-Covid recovery is faltering has led major banks to cut their 2023 gross domestic product (GDP) growth forecasts.
Nomura said on Friday it had cut its forecast for China’s GDP growth this year to 5.1% from 5.5%.
The Japanese bank’s move followed similar moves by UBS, Standard Chartered, Bank of America (BoA) and JPMorgan.
The banks now expect China’s GDP growth to be between 5.1% and 5.7% this year, down from an earlier range of 5.5% to 6.3%.
ALSO SEE: Micron to Pour $602m in China to Show ‘Unwavering Commitment’
Additional stimulus expected
Data on Thursday showed China’s economy stumbled in May with industrial output and retail sales growth missing forecasts, adding to expectations that Beijing will need to do more to shore up a shaky post-pandemic recovery.
The government has set a modest GDP growth target of around 5% for this year after badly missing its 2022 goal.
UBS economists on Friday cut their GDP forecast to 5.2% from 5.7% and said in a note that they expected more policy support to come.
China’s central bank on Thursday cut the interest rate on its one-year medium-term lending facility, the first such easing in 10 months, paving the way for cuts in the benchmark loan prime rates (LPR) next week.
Economists at Standard Chartered lowered their 2023 growth forecast to 5.4% from 5.8% previously.
“Additional stimulus likely to be measured, as China prioritises improving business climate and confidence,” the economists said in a note.
Standard Chartered lowered its forecast for China’s second-quarter growth to 5.8% from 7%. The April-June growth is widely expected to be boosted by a low base of comparison given there were widespread Covid lockdowns a year earlier.
BofA downgraded its 2023 GDP growth forecast to 5.7% from 6.3%, while JPMorgan had earlier trimmed its outlook to 5.5% from 5.9%.
China will roll out more stimulus to support a slowing economy this year, but authorities are likely to focus on shoring up weak demand in the consumer and private sectors, sources involved in policy discussions said.
Nomura has also cut its forecast for China’s 2024 growth to 3.9% from 4.2%, while BofA cut its outlook to 5.0% from 5.2%.
- Reuters with additional editing by Jim Pollard
ALSO SEE:
China’s Economic Aggression a Global Threat, says Germany
PBOC Cuts Lending Rate as China’s Economy Slows in May
Chinese Companies Prepare for Weaker Yuan as Rate Cuts Loom
China’s Exports Sink by 7.5% in May Amid Global Slowdown
Firms Backing China’s PLA Pilots, Missiles Hit in US Crackdown
China’s Property Sector Will Remain Weak For Years: Goldman
