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JPMorgan, Citi, Goldman cut China GDP forecast a few times this year

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Workers load goods for export onto a crane at a port in Lianyungang, Jiangsu province, China June 7, 2019.


BEIJING – International investment firms have changed their China GDP forecasts nearly every month so far this year, with JPMorgan making six adjustments since January.

That’s according to CNBC analysis of the firms’ notes. JPMorgan did not immediately respond to a request for comment.

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The U.S. investment bank most recently cut its China GDP forecast in July to 5%, down from 5.5% previously.

That came alongside cuts this month by Citi and Morgan Stanley to 5%.

The average prediction among six firms studied by CNBC now stands at 5.1%, close to the “around 5%” target Beijing announced in March.

Citi’s latest forecast marks the firm’s fourth change this year. Morgan Stanley has only adjusted its forecast once since it was set in January.

During that same period, Nomura changed its forecast four times, while UBS adjusted it three times and Goldman Sachs changed forecasts twice.

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The investment banks mostly revised their forecasts higher early this year after China’s initial rebound, following three years of strict Covid controls.

Quarter-on-quarter revisions 

The latest cuts come as recent economic data point to slower growth than expected, and authorities show little inclination to embark on large-scale stimulus. Second-quarter GDP rose by 6.3% from a year ago, missing the 7.3% growth that analysts polled by Reuters had predicted.

The disappointment in second-quarter GDP growth, however, is due to official revisions to China’s quarter-on-quarter growth last year, according to Rhodium Group’s Logan Wright and a team.

The resulting low figure helps Beijing make a case for supporting the economy, the analysts said in a July 17 report. “Understand what you are seeing in this year’s GDP data: these are artificially constructed narratives for various audiences, not reports on China’s economic performance.” 

The National Bureau of Statistics did not immediately respond to CNBC’s request for comment.

Instead of releasing multiple reads of data, the bureau discloses quarterly GDP relatively soon after the end of the period, and subsequently issues revisions.

The statistics bureau has also issued public statements about punishing local governments for falsifying data. The accuracy of official data in China has long been in question.

Goldman Sachs on Friday noted the seasonal revisions, but maintained its 5.4% forecast for China’s growth. “On net, we do not think the surprises are either consistent or large enough for us to make major adjustments to our China growth forecast this year.”

Non-official data

Institutional predictions

Looking beyond 2023

Although businesses and investors have expressed uncertainty about China’s near-term economic trajectory, analysts expect growth in the world’s second-largest economy will still pick up in the longer term.

“Overall, there is a case emerging for a cyclical rebound in China’s economy in early 2024, even without any meaningful policy support in the second half of 2023,” the Rhodium analysts said.

They said that given four quarters, a steady household consumption recovery should help boost service sector employment, while industrial inventories will likely need restocking down the road.

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