Economists raised economic growth forecasts for China for this year and next after the nation dropped its COVID-19 restrictions faster than expected, ushering in a recovery, and following a surprisingly resilient performance toward the end of last year.
The world’s second-largest economy is now forecast to expand 5.1 percent this year and 5 percent next year, according to a median estimate in a Bloomberg survey of economists.
The projections are higher than 4.8 percent and 4.9 percent respectively in last month’s poll.
Photo: Bloomberg
China’s abrupt ending of its “zero COVID” policy last month, and the peaking of infections in many places over the past few weeks, have fueled optimism that the costs of reopening would be restricted to a period of holidays when activity is traditionally slow. Consumption is widely expected to rebound after infection waves ebb and to be a key driver of growth.
Main economic indicators published by Beijing earlier this week for last month and the fourth quarter last year beat analysts’ estimates, prompting major banks such as Goldman Sachs Group Inc and Societe Generale SA to boost their forecasts for China’s growth.
Bloomberg economists forecast China’s growth to accelerate to 5.8 percent this year from 3 percent last year, up from a previous forecast of 5.1 percent, which assumed a slower, mid-year end to “zero COVID.”
Economists expect growth in the current quarter to soften to 2.5 percent, down from their previous prediction of 3.1 percent, before picking up to 6.8 percent from April to June, the Bloomberg survey showed.
“The rapid reopening has raised hopes of an economic boost, especially on private consumption, but there is transitional pain to be endured at least in the first quarter,” Coface Asia-Pacific chief economist Bernard Aw (歐韋良) said.
Multiple headwinds face the Chinese economy, such as sluggish consumer confidence amid a tight job market and weakening exports, Aw said.
“There is a risk that, despite the policy measures and reopening, China still might not see the economic boost it expects,” he said.
The median estimate for exports for this year was slashed to minus-3.7 percent from minus-0.4 percent, while the outlook for imports was cut to minus-0.1 percent from 1.3 percent growth, the survey showed.
Fixed asset investment is expected to expand 5.5 percent this year, up from 5.4 percent in the previous survey. Retail sales growth is forecast to accelerate to 7.5 percent, up from 6.3 percent previously.
Consumer inflation forecasts are unchanged at 2.3 percent and 2.2 percent for this year and next.
The reserve requirement ratio for major banks is projected this quarter to be cut to 10.75 percent, unchanged from the previous survey.
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