Analysts at JPMorgan and Citi upgraded their full-year forecasts for China’s economy after the country reported a better-than-expected growth of 4.5% in the first quarter.
JPMorgan increased its growth forecast for China in 2023 from 6% to 6.4%, citing the most recent quarterly report as a sign of continued expansion.
China’s recovery “will likely continue in the near term” before its economic momentum starts reducing in the second half of the year, according to JPMorgan’s senior China economist Haibin Zhu in a note published on Tuesday.
Also, Citi revised its prediction from 5.7% to 6.1%, stating that the Chinese economy is “well on track on its post-Covid recovery led by consumption and services.”
The company also noted that the first quarter’s stronger-than-expected results signals additional growth in the future.
Although services did better than other components of consumption-driven growth in Q1, economists at Citi remain cautious in their outlook.
Citi economists said “the release of pent-up demand during Covid and holiday helped,” but they warned that “without big stimulus in sight and the discounts intensifying,” the sector’s outlook was cloudy.
