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BofA cuts China’s GDP growth forecast for the next 3 years By Reuters

by Mike Robinson

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© Reuters. FILEPHOTO: Construction workers in Shanghai, China on July 12, 2021. REUTERS/Aly Song

(Reuters) – A top U.S. investment bank cut China’s economic growth forecast on Tuesday for the next three years thanks to the combination of the Delta variant outbreak and tightening controls on the property and the infrastructure sector.

BoFA Securities reported that China’s real gross domestic products growth was cut to 8.0% this year, from 8.3% in the previous 2022 forecast and down to 5.3% from 6.2% for 2022. This is compared with 8.3% for 2023.

It also stated that its base-case scenario regarding the continuing problems at Chinese property company Evergrande would show “little spillover effect” on other sectors and markets, if government intervention is made to facilitate debt restructuring.

Analysts at the bank stated in a note that any delay in the policy response, or the handling of major debtor defaults from the fourth quarter 2021 to 2022 would likely increase the risk of growth disruption.

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