J.P. Morgan, Citigroup, Other Foreign Banks Lift China GDP Growth Forecasts

11/10 2023 10:00

Many foreign investment banks, including J. P. Morgan, Citigroup, and Deutsche Bank, have raised their economic growth predictions for China this year and are optimistic about the outlook for Chinese stocks.

Thanks to a better-than-expected economic performance in August and support from government policies, China's gross domestic product may increase 5 percent this year, Zhu Haibin, China chief economist and head of China economic research at J.P. Morgan, was cited as saying by The Paper. The New York-based firm had earlier forecast 4.8 percent.

Earlier this year, China’s government set a target of “about 5 percent” GDP growth for 2023.

Citigroup has lifted its forecast to 5 percent from 4.7 percent, saying retail sales and industrial production may pick up.

The Chinese economy is stabilizing and will rebound this quarter, said Xiong Yi, China chief economist at Deutsche Bank, adding that the fourth-quarter expansion will be 5 percent and annual growth 5.1 percent.

Goldman Sachs expects the expansion in the third and fourth quarters to be 5.5 percent and 5 percent, respectively, resulting in an annual uptick of 5.4 percent, China Central Television reported, citing a report by the New York-based firm's macro research team.

Boosted by the tourism, catering, and leisure segments, the service sector expanded 19 percent in the first eight months of 2023, according to Marty Dropkin, head of Asia-Pacific equities at Fidelity International. Further stimulus measures are expected to be introduced, likely boosting consumer confidence, with the market having a huge potential for a rebound in consumption, he noted.

Many foreign financial institutions also pointed out that Chinese stock market valuations may have bottomed out and are optimistic about this quarter. Goldman's research department said it is upbeat about sectors such as autonomous control, new infrastructure, renewable energy, electric vehicle supply chain, and mass consumption as A-shares are less sensitive to geopolitical and liquidity-related factors.