JPMorgan, Citi, and UBS expect the nation’s economy to perform better than expected in 2023
Global economists have improved their full-year forecasts for the Chinese economy following its impressive first-quarter results, CNBC reported on Wednesday.
JPMorgan reportedly raised its 2023 growth outlook to 6.4% from a previous forecast of 6%, saying the latest quarterly report points to further growth ahead.
Citi lifted its forecast to 6.1% from a previously projected 5.7%, stating that the Chinese economy is “well on track on its post-Covid recovery led by consumption and services.”
Meanwhile, UBS upgraded its forecast for the year from 5.4% to 5.7%, “given the stronger-than-expected recovery in Q1 2023, driven by both a robust rebound in consumption and property.”
The upgrades follow a report by China’s National Bureau of Statistics on Tuesday which showed the economy had rebounded faster than expected, surpassing growth estimates for the first quarter of 2023. According to the report, the world’s second largest economy grew at a rate of 4.5% year-on-year on the back of relaxed Covid-19 restrictions and recovering consumer spending.
“The strong 1Q GDP report points to a strong post-reopening recovery,” JPMorgan’s chief China economist, Haibin Zhu, was quoted as saying. He pointed out that a range of factors, including a notable rebound in travel-related consumption and services, had led the strong recovery in first-quarter activity.
“The stronger-than-expected 1Q GDP reading lifts our full-year GDP growth forecast,” Zhu said, adding that China’s recovery “will likely continue in the near term.”
Citi economists also assumed that the stronger-than-expected first-quarter growth suggests further expansion ahead.
“Given meaningful recovery perhaps only started after the Chinese New Year, the underlying momentum could be stronger than the headline number suggests,” they said in a note seen by CNBC.
“The release of pent-up demand during Covid and holiday helped, but we remain cautious on its outlook without big stimulus in sight and the discounts intensifying,” analysts added.
Global economists previously expressed concern that China’s economic recovery could take longer than expected amid supply chain disruptions from pandemic-related curbs.
