Home Business JPMorgan, Citi, Goldman cut China GDP forecast a few times this year

JPMorgan, Citi, Goldman cut China GDP forecast a few times this year

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JPMorgan, Citi, Goldman cut China GDP forecast a few times this year

Workers load goods for export onto a crane at a port in Lianyungang, Jiangsu province, China June 7, 2019.

Reuters

BEIJING – International investment firms have changed their China GDP forecasts nearly every month so far this year, with JPMorgan making six adjustments since January.

That’s according to CNBC analysis of the firms’ notes. JPMorgan did not immediately respond to a request for comment.

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The U.S. investment bank most recently cut its China GDP forecast in July to 5%, down from 5.5% previously.

That came alongside cuts this month by Citi and Morgan Stanley to 5%.

The average prediction among six firms studied by CNBC now stands at 5.1%, close to the “around 5%” target Beijing announced in March.

Citi’s latest forecast marks the firm’s fourth change this year. Morgan Stanley has only adjusted its forecast once since it was set in January.

During that same period, Nomura changed its forecast four times, while UBS adjusted it three times and Goldman Sachs changed forecasts twice.

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The investment banks mostly revised their forecasts higher early this year after China’s initial rebound, following three years of strict Covid controls.

Quarter-on-quarter revisions 

Non-official data

Institutional predictions

The World Bank and International Monetary Fund also put out regular economic forecasts for China and other countries. However, their reporting schedule means that predictions may not fully match current the current economic situation.

In June, the World Bank raised its forecast for China’s growth this year to 5.6%, up from 4.3% previously.

The International Monetary Fund in April raised its forecast for China’s GDP to 5.2%, up from 4.4% previously. This month, its spokesperson noted that growth was slowing in China, and said an “updated forecast” would be reflected in the IMF’s next World Economic Outlook.  

Chinese officials have in the last several weeks emphasized the country is on track to reach its annual growth target of around 5%.

Among the six investment firms CNBC looked at, the highest China GDP forecast so far this year was JPMorgan’s 6.4% figure — when the bank adjusted for the second time in April alone.

In all, the range of the firm’s forecasts have spanned 1.4 percentage points, the most of any of those in the CNBC analysis.

Looking beyond 2023

Although businesses and investors have expressed uncertainty about China’s near-term economic trajectory, analysts expect growth in the world’s second-largest economy will still pick up in the longer term.

“Overall, there is a case emerging for a cyclical rebound in China’s economy in early 2024, even without any meaningful policy support in the second half of 2023,” the Rhodium analysts said.

They said that given four quarters, a steady household consumption recovery should help boost service sector employment, while industrial inventories will likely need restocking down the road.