JPMorgan cuts China's 2023 growth forecast after sluggish Q2 GDP growth

JPMORGAN Chase trimmed China’s growth forecast for 2023 after the country’s economy grew at a weaker pace in the second quarter, with post-Covid momentum faltering rapidly.

JPMorgan economists led by Haibin Zhu said on Monday (Jul 17) they now expect China’s economy to grow 5 per cent this year, against an earlier estimate of 5.5 per cent.

On a year-on-year basis, China’s economy grew 6.3 per cent in the second quarter, accelerating from 4.5 per cent in the first three months of the year, but the rate was well below the expectations for growth of 7.3 per cent as demand weakened at home and abroad.

Chinese authorities face a daunting task in trying to keep the economic recovery on track and putting a lid on unemployment, as any aggressive stimulus could fuel debt risks and structural distortions.

“We expect the government to step up policy easing measures after the disappointing Q2 gross domestic product report”, Zhu said.

The global brokerage believes that a 10-basis-point policy rate cut in Q4 and nationwide housing policy easing – including a relaxation of down-payment requirements – could be possible steps the government could take to boost economic growth. REUTERS