Wall Street banks are split on China’s growth prospects after April’s data missed forecasts
- JPMorgan, Barclays cut their growth forecasts for China’s economy
- UBS, Morgan Stanley kept their full-year forecasts unchanged
Investment banks are split over whether weaker-than-expected Chinese economic data for April redefine the growth outlook for the entire year.
China’s poor economic performance last year makes for a low base of comparison, suggesting it’s easier for gross domestic product to register solid growth for 2023.
That is behind the thinking of Standard Chartered Plc economists led by Wei Li, who retained their projection for GDP to rise 5.8 per cent this year – even after official data Tuesday showed China’s industrial output, retail sales and fixed investment grew at a much slower pace than expected last month.
But JPMorgan Chase and Barclays Plc disagreed, reducing their forecasts.
“April data points at a big loss in recovery momentum,” JPMorgan economists led by Zhu Haibin wrote in a note to clients. The bank lowered its full-year GDP growth estimate to 5.9 per cent from a previous 6.4 per cent, which had been among the highest of economists’ forecasts.
Barclays economists led by Jian Chang went further, with “5.6 per cent growth for this year now out of reach,” setting a new target for this year of 5.3 per cent. For the current quarter, the bank slashed its calculation to just a 1 per cent gain from the previous three months, at an annualised rate.
Some of those maintaining their 2023 forecasts cited the likelihood of Beijing expanding its stimulus measures to support the economy.