Several economists have revised down their 2023 GDP growth forecasts for China, citing disappointing economic data for May and a sluggish post-COVID recovery. UBS, Standard Chartered, Bank of America (BoA), and JPMorgan now expect China’s GDP growth to range between 5.2 percent and 5.7 percent, marking a downward revision from their previous projections of 5.7 percent to 6.3 percent. These revisions reflect concerns over weakening domestic demand, particularly in the housing market and private investment sectors.
UBS Lowers GDP Forecast due to Weak Q2 Momentum
UBS, a leading global bank, has revised its China 2023 GDP growth forecast from 5.7 percent to 5.2 percent, mainly influenced by disappointing May data. Wang Tao, Chief China economist at UBS, highlighted that the growth momentum in the second quarter is tracking much weaker than initially anticipated.
JPMorgan and BofA Follow Suit
JPMorgan economists, led by Haibin Zhu, have also reduced their 2023 growth projection for China from 5.9 percent to 5.5 percent. The decision was driven by the general softness observed in May’s activity data, which signaled a weakness in domestic demand. They specifically noted challenges in the housing market and private investment. Similarly, BofA Global Research downgraded its economic growth forecast for China to 5.7 percent from the earlier estimate of 6.3 percent. Helen Qiao, leading economist at BofA, cited China’s May industrial output and retail sales growth falling short of expectations as key factors behind the revision.
Standard Chartered Joins the Downward Trend:
Standard Chartered economists have also revised their growth forecast for China in 2023, lowering it to 5.4 percent from the previous estimate of 5.8 percent. The downward revision came after the disappointing May data, which pointed to underlying challenges within the economy. Similar to other banks, Standard Chartered highlighted softness in domestic demand as a significant contributing factor.
Potential Policy Responses:
With concerns about a slowdown in China’s economy, experts anticipate that authorities will introduce additional stimulus measures to support growth. However, it is expected that policymakers will focus on shoring up weak demand in the consumer and private sectors. By prioritizing the improvement of the business climate and bolstering confidence, China aims to navigate the challenges posed by the post-COVID recovery and achieve sustainable economic growth.