Nomura NRSCF has cut its forecast for China’s 2023 gross domestic product (GDP) growth to 5.5% from 5.9% previously, after April data showed a post-COVID recovery in the world’s second-largest economy is losing steam.
Data on Tuesday showed China’s April factory output and retail sales growth undershot forecasts, adding pressure on policy-makers to shore up wobbly activity.
Nomura lowered its forecast for second-quarter GDP growth to 7.8% year-on-year from 8.4%, analysts at the bank said in a note.
The economy grew 4.5% in the first quarter from a year earlier. The government aims for 2023 growth of around 5%.
Nomura expects China’s central bank to cut its benchmark lending rate – loan prime rate (LPR) – by 10 basis points in mid-June.
“As China’s economy moves out of the post-COVID sweet spot, Beijing may have to introduce other supportive measures, including adding transfers to local governments and SOEs (state-owned enterprises) via its policy banks,” analysts at the investment bank said in a research note.
“However, unlike previous cycles, we see no easy fix this time around as, in our view, the real barrier to sustaining the growth recovery is a lack of confidence.”
Barclays cut its forecast on 2023 GDP growth forecast to 5.3% from 5.6%, analysts at the bank said in a note.
Barclays lowered its forecast for second-quarter GDP growth to 7.8% year-on-year from 8.4% due to weakening housing demand and consumption, analysts at the bank said in a note.