Goldman Raises China 2023 GDP Growth Forecast To 6.0% From 5.5%

[beijingwalker]

ECONOMICS​

Goldman Raises China 2023 GDP Growth Forecast To 6.0% From 5.5%​

on March 15, 2023
Goldman Raises China 2023 GDP Growth Forecast To 6.0% From 5.5%

Earlier this week, amid the deflationary panic that suddenly swept the US banking sector and in no uncertain terms, the US economy, we joked that ‘by the end of this month, markets will be hoping China gets to export some of that sweet, sweet inflation.’

By the end of this month, markets will be hoping China gets to export some of that sweet, sweet inflation
— zerohedge (@zerohedge) March 13, 2023

Thanks to China’s rapid reopening, January-February activity data broadly improved from December. Retail sales and especially the Services Industry Output Index both rose significantly in January-February, led mainly by the strong recovery in Covid-sensitive services consumption. Year-on-year industrial production growth rose modestly in January-February, though slightly less than expected, driven by faster output growth of automobiles, electric machinery and ferrous metal smelting. Fixed asset investment growth increased further in January-February from December, beating market consensus but in line with our forecast, mainly led by stronger services- and infrastructure-related investment. Property-related activity growth improved broadly and meaningfully in January-February, on the back of continued housing easing measures, delayed home purchases during the Covid “exit wave” and a low base last year.
Taking consideration of the rapid improvement in domestic mobility and solid January-February activity data, particularly in services, we upgrade our Q1 and 2023 full-year GDP growth forecast to 4.0% yoy and 6.0% yoy, respectively, from 2.7% and 5.5% previously, but lower our 2024 GDP growth forecast to 4.6% from 5.0% previously, as more of the reopening boost will have played out by the end of this year than in our previous baseline.

The conclusion:

The rapid improvement in domestic mobility and solid January-February activity data suggest China’s post-reopening recovery appears stronger than our previous expectations, thanks mainly to the frontloading of reopening impulse and fiscal support. However, this also leaves less of a reopening boost for 2024 and slightly increases the risk of earlier policy normalization later this year than our previous baseline (though we are not changing our policy expectations in our baseline). As such, we upgrade our Q1 GDP growth forecast to 10.5% qoq sa annualized from 5.0% previously, while lowering our forecast for Q2 and Q3 to 5.5% and 5.3% qoq sa annualized, respectively, from 9.0% and 7.0% previously, with other quarterly sequential growth forecasts unchanged. These adjustments boost our 2023 full-year GDP growth forecast to 6.0% yoy from 5.5% previously (well above the government target of “around 5%” GDP growth this year), but lower our 2024 forecast to 4.6% from 5.0% previously, as more of the reopening boost will have played out by the end of this year than in our previous baseline (Exhibit 5). In year-on-year terms, our Q1-Q4 2023 GDP growth forecast is 4.0%, 8.0%, 5.2% and 6.5%, respectively (vs. 2.7%, 7.5%, 5.2% and 6.5% previously).

Goldman Raises China 2023 GDP Growth Forecast To 6.0% From 5.5%

Goldman Raises China 2023 GDP Growth Forecast To 6.0% From 5.5% Earlier this week, amid the deflationary panic that suddenly swept the US...

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[kankan326]

Which is 1/3 of India GDP