As recent data suggested that China is still struggling to recover from the COVID pandemic, major Western banks have trimmed their 2023 GDP growth projections for the world’s second-largest economy to between 5.2% and 5.7%.
The National Bureau of Statistics reported on Thursday that industrial output increased 3.5% in May compared to the same month last year, as weak demand in China and globally hindered its growth. The data was slower than the 5.6% increase in April and slightly below a 3.6% increase forecast by a Reuters poll.
Meanwhile, retail sales growth which is a key gauge for consumer confidence, rose 12.7% in May from a year earlier, missing expectations of 13.6% growth and 18.4% in April.
Weaker results raised expectations that China would have to implement stimulus measures to shore up its economy.
UBS, Standard Chartered, BoA, and JPMorgan have lowered their forecast for China’s GDP growth this year from 5.7% to 6.3% to 5.2% to 5.7%.
Standard Chartered economists lowered their growth projection for 2023 from 5.8% to 5.4%, pointing out that China is more likely to take a cautious approach to adding stimulus as it works to boost the business climate and confidence in the country.
BofA reduced its GDP growth prediction for 2023 from 6.3% to 5.7%, and JPMorgan had previously reduced its outlook from 5.9% to 5.50%.
After falling far short of its 2022 target, the Chinese government has set a relatively modest GDP growth target of roughly 5% for this year.
