After the Chinese economy expanded faster than anticipated in the third quarter compared to a year earlier, JP Morgan and Nomura raised their projection for the country’s economic growth on Wednesday.
In 2023, JP Morgan projects China’s GDP to rise 5.2%, above Beijing’s stated goal of 5% growth and its earlier projection.
Nomura increased their prediction from 4.8% to 5.1%. Data released on Wednesday revealed that China’s GDP increased by 4.9% between July and September last year, above the 4.4% gain predicted by a Reuters poll. However, it moved more slowly than the second quarter’s 6.3% expansion.
“Like August, monthly activity for September came in greater than anticipated. This is optimistic,” said JPM analysts led by Haibin Zhu, who also predicted that the momentum of China’s economic recovery will continue in the months to come.
“Policy tailwind sectors remain strong; export volume has returned to positive growth… the recovery in retail sales is particularly encouraging,” the bank stated. Zhu did warn about weak points in the economy, such as private investment and a drop in the property market.
“Weak nominal GDP growth suggests that the earnings and profit outlook remains a hurdle in the path to the recovery in private investment,” he stated.
In 2024 and 2025, JPM predicts that China’s potential growth will decline more quickly than anticipated to a range of 4%–4.5% and 3.5%–4%, respectively.
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