International financial institutions raise forecast for nation’s GDP growth in 2023

Since the start of 2023, foreign institutions have collectively raised their expectations for China's economic growth this year.

On Monday, USB raised its forecast for China's GDP growth for this year to 5.4 percent from the previous 4.9 percent. Wang Tao, a USB economist said on Tuesday during a teleconference that the main reason for the upgrade of China's economic growth forecast is the country's economic reopening in January-February being better than they had expected, the feared "second wave" of COVID infections didn't materialize, and supply disruptions were minimal. 

In addition to the boost and recovery in consumption, Wang pointed to the stabilizing rebound in the real estate industry as one of the key reasons for its upward revision of China's economic growth forecast. Over the last three weeks, the average daily sales in the property market among China's 30 major cities have significantly exceeded 2022's levels and are fast approaching 2019 levels sooner than expected. 

Wang noted that China's GDP growth in the first quarter of the year could be around 3 percent year-on-year.

UBS analyst Meng Lei said that A-shares are still at a low valuation level, and short-term market consolidation has provided investors with good layout opportunities. As various optimistic factors appear, overseas funds will continue to net an inflow of A-shares.

U.S. investment bank JPMorgan also recently raised its forecast for China's GDP growth by 1 percentage point to around 5.6 percent in 2023. According to Zhu Haibin, chief China economist at the bank, the recovery in consumption is the most important driver of China's economic growth this year.

Shan Hui, chief China economist for Goldman Sachs Research, said that his forecast for China's full-year economic growth in 2023 reached 5.5 percent this year from a previous 3 percent. He noted the most important contributor to China's economic growth is residential consumption, which is expected to grow by 8.5 percent this year.

At the beginning of this year, HSBC had expected the country's economy to grow at a rate of 5 percent in 2023. In February, Liu Jing, chief economist for Greater China at HSBC Global Research, said that the Chinese economy now appears to be recovering from the impact of the epidemic at a faster pace than previously expected. As a result, HSBC has raised its forecast for China's economic growth to 5.6 percent in 2023.

Xing Ziqiang, also known as Robin Xing, Chief China Economist at Morgan Stanley also said recently that China's economic growth is expected to reach 5.7 percent in 2023, 0.7 percentage points higher than the previous forecast in November 2022.

International credit rating agency Fitch raised its forecast for China's economic growth in 2023 to 5.0 percent in early February from a previous forecast of 4.1 percent, while Moody's recently raised its forecast for China's real GDP growth this year to 5.0 percent. The International Monetary Fund (IMF) predicted in January that China's economy will grow by 5.2 percent this year, 0.8 percentage points above its previous forecast.

A Chinese government work report also sets the target for the country's GDP growth at around 5 percent in 2023.