Citi raises its forecast for China’s GDP growth
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Moody’s estimates that China’s economy is at least 25% dominated by the real estate sector and its related areas.
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BEIJING — China’s economy faces so much new pressure from Covid that Beijing may increase stimulus — boosting overall growth, Citi said Thursday.
“Given China’s strong start and anticipated support from the government, we have revised our growth projections for 2022 from 4.7% to 5.0%,” Xiangrong Yu of Citi said late Thursday.
New forecasts are closer to official Gross Domestic Product target. around 5.5%It was first announced in March. These are the January and February versions. China reported better-than-expected growth in retail sales,Investment in fixed assets and production
According to the report, Citi’s GDP Forecast was upgraded due to expectations for investment in infrastructure projects.
The official Purchasing Managers’ Indexes — which measure market conditions — for manufacturing and services businesses both fell into contraction territory in March. It’s the first time these indexes have experienced this since February 2020.
Yu stated Thursday that the Omicron Wave is now the most severe outbreak since Wuhan. However, its effect on PMI seems less than expected given the extent of the epidemic. The results show that while the measures are having a substantial impact on the demand for services and goods, they have had a milder effect on the production and construction.
“China [is]He said that adapting in order to reduce economic costs and implement the “dynamic zero-Covid” policy were key.
China experienced its worst Covid-19 outbreak since 2020, following the shock from the pandemic. Shanghai and Shenzhen were among the major cities that had to put in quarantines and lockdowns to stop outbreaks of the transmissible Omicron variant.
According to Friday’s data, the Caixin manufacturing PMI fell in March, its lowest level since February 2020.
Assistance for the property sector
Yu hopes policymakers will support the huge, insolvent real estate market. Beijing cannot afford to delay efforts to stabilize its property market through measures like looser credit policies.
In the past few months, housing sales have declined as Beijing tightened its grip on developers’ dependence on borrowing for growth. According to Moody’s, at least 25% of China’s economic output has been attributed to real estate and other related industries.
Yu, along with other economists, also anticipate the People’s Bank of ChinaThis month, banks will be able to reduce interest rates and have more reserves than they need.
“China [has a]Very ambitious growth targets to be met by the end” Carlos Casanova (senior Asia economist, UBP) said on Thursday, CNBC. “Capital Connection.”
He said that if they do not implement another round rate cut in April, it would be bad news for 5.5% [goal then]It would be very hard to do.”
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