Coronavirus: China’s 2020 growth forecast slashed in surprise move by prominent bank CICC

China International Capital Corporation has sharply downgraded its 2020 growth forecast for China to 2.6 per cent, from 6.1 per cent in January

The investment bank says more gloomy news is predicted in the second quarter as the coronavirus outbreak continues to ripple through economy

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China International Capital Corporation has slashed its 2020 economic growth forecast for China amid the coronavirus pandemic. Photo: qq.com

Published: 6:31pm, 24 Mar 2020Updated: 11:20pm, 24 Mar 2020

Debate about the impact of the coronavirus pandemic on China’s economy took on a new complexion on Monday after the country’s most prominent investment bank turned pessimistic, slashing its 2020 growth forecast.

President Xi Jinping has insisted China will meet its economic and social developments goals this year, including eradicating poverty and building up a “moderately well-off society”, despite the virus outbreak sending the economy into free fall in the first two months of the year and increasing evidence of a global recession.

The government has recently strengthened its rhetoric about the resilience of China’s economy, and a number of Chinese economists still believe gross domestic product (GDP) growth this year could be close to the 6 per cent target range that was expected to be announced in March.

But on Monday, the China International Capital Corporation (CICC) – seen by many as the country’s most highest-profile brokerage – stunned many in Chinese financial circles by sharply cutting its real GDP growth forecast for 2020 to a record low of 2.6 per cent, from 6.1 per cent in January.

The CICC had previously been relentlessly positive about China’s economic outlook, and the shift in tone highlights the gloomy prospects facing the world’s second largest economy.

The Beijing-headquartered firm is the first China-foreign joint venture investment bank, founded by the China Construction Bank, Morgan Stanley, the China National Investment and Guaranty Corporation and other two companies in 1995. Since then, it has been a benchmark for Chinese economic optimists.

“Many poor figures will [appear] in the second quarter, and as the epidemic continues, there will be worse readings in May, June or even beyond,” Liang Hong, chief economist at CICC, said in a telephone conference call on Monday, according to a transcript seen by the South China Morning Post.