US banks raise their forecasts for China’s economic growth in 2023

​Banks including Citigroup and JPMorgan Chase have raised their forecasts for the growth rate of China’s economy to 5% in 2023, as the recent improvement in data helps to build a consensus on the government’s ability to achieve the GDP target”.

Economists at JPMorgan, led by Guo Haibin, wrote in a research note that the improved activity data since August “suggests that the economic slowdown since April has most likely reached its lows, and the economy has begun to change course”.

This trend, together with additional policy support such as monetary easing, “appears to have put the economy back on track” to meet the official growth target of around 5%, they added. “Citigroup” raised its forecast for the growth rate of China’s economy from 4.8%.

Economists at Citigroup confirmed that retail sales and industrial production in China may improve, and added that the recent contraction of the country’s exports may also shrink, after 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 core demand will rise thanks to the growing policy momentum,”said the economists – led by Yu Xiangrong.

Citigroup had previously predicted that China’s economy would record a growth rate of 4.7%, making it among the most pessimistic investment banks about China,” the report said.

Economists at Citigroup said that since the end of August, “policy momentum has clearly exceeded expectations” thanks to some easing measures in the real estate sector.

The latest Bloomberg poll of economists ‘ opinions showed that the average growth forecast is at 5% during 2023. Many companies lowered their estimates for the economy from forecasts released earlier in the year, as the real estate crisis slowed down activity for a longer period than expected.