Why Western analysts moved to improve forecasts for China’s GDP

Western financial institutions and analytical agencies are improving their forecasts for the Chinese economy after a series of downward revisions. GDP growth estimates were increased, for example, by banking holdings Citigroup, JPMorgan, the largest brokerage company Nomura, the Australian financial group AMZ (one of the top 4 in Australia) and other companies. The forecasts were revised in different increments: the listed institutions increased them from 0.2 to 0.4 percentage points. The most positive estimates are given by AMZ – they expect China’s GDP to grow by 5.1% in 2023. In the previous forecast, the group believed that China’s economy would expand by 4.9%. Nomura improved estimates from 4.6 to 5%, JPMorgan – from 4.8 to 5%, AMZ – from 4.9 to 5.1%, Citigroup – from 4.7 to 5%.

Financial institution analysts make broadly similar arguments for improved expectations. They highlight growth in retail trade and industrial production in August above consensus, while among the main risks they point to ongoing problems in the real estate market and the high debt load of the Chinese economy. A few months earlier, the same agencies consistently worsened their forecasts for the Chinese economy. For example, JPMorgan began lowering its estimates for China’s GDP almost every month since April. Then the investment bank predicted an increase of 6.4% in 2023; by August, expectations dropped to 4.8%. Other financial institutions acted similarly. Then they explained the worsening forecasts with the same argument, only interpreted in the opposite direction: the economy was growing below consensus forecasts.