On Wednesday, CNBC reported that following an impressive first quarter economic report, global economists are upgrading their full-year forecasts for the Chinese economy.
JPMorgan, noting that the latest quarterly report out of China only points to further growth ahead, raised its 2023 growth forecast from a previous prediction of 6% growth, to 6.4% growth.
After Citi stated that the Chinese economy is “well on track on its post-Covid recovery led by consumption and services,” it raised its forecast from the previous 5.7% prediction to 6.1%.
UBS said that “given the stronger-than-expected recovery in Q1 2023, driven by both a robust rebound in consumption and property,” it would be raising its forecast from 5.4% to 5.7%.
The changes in forecasts were prompted by the new report released Tuesday from China’s National Bureau of Statistics. It showed China’s economy rebounding faster than expected, beating growth estimates for 2023’s first quarter. The report showed that with its strict Covid-19 restrictions now relaxed and consumer spending recovering, China’s economy had grown at a rate of 4.5% year over year.
JPMorgan’s chief China economist, Haibin Zhu, said, “The strong 1Q GDP report points to a strong post-reopening recovery.” He noted that the strong recovery in the first quarter was due to a range of factors, including a strong rebound in travel-related consumption and services.
Zhu said, “The stronger-than-expected 1Q GDP reading lifts our full-year GDP growth forecast,” with a recovery that “will likely continue in the near term.”
Citi’s analysts also expressed confidence that the strong first quarter expansion would point to further growth in the near term.
In a note to clients, they wrote, “Given meaningful recovery perhaps only started after the Chinese New Year, the underlying momentum could be stronger than the headline number suggests.”
The analysts added, “The release of pent-up demand during Covid and holiday helped, but we remain cautious on its outlook without big stimulus in sight and the discounts intensifying.,”
Previously, analysts were expecting the supply chain disruptions which followed the pandemic related restrictions would persist, stifling the speed of China’s economic recovery.
