Several economist and investment banks have raised their projections for China’s GDP growth between 6 percent to 6.5 percent for 2023 following a recovery of the country’s consumption market during the Spring Festival holidays, as reported by Global Times.
Chen Fengying who is an economist and former director of the Institute of World Economic Studies told Global Times that the country’s economy might see a growth of 6 percent year-on-year at most in 2023.
As per Chen this is due to country’s economic recovery to strong policy support and fewer Covid disruptions as well as impressive growth in emerging sectors. Not just him, another economist Cao Heping from Peking University also predicted China’s GDP growth rate between 6-6.5 percent.
Cao told Global Times that new investment opportunities in the repair of networks and infrastructure in rural areas, as well as digital upgrading of large-scale infrastructure projects like roads, railways, ports, and other projects, would give rise to new industries and significantly alter China’s economy.
On 24 January, seeing the country’s strong fourth quarter performance, Investment management company Vanguard upgraded its forecast for economic growth in China to 5.3 percent from the earlier 4.5 percent.
These statements comes as the IMF forecast said that the world’s second largest economy will expand 5.2 percent this year. The Chinese economy is “still operating below potential” in 2023, Sonali Jain-Chandra, the IMF’s mission chief for China, said during a press briefing on Friday.
“China’s economy is set to rebound this year as mobility and activity pick up after the lifting of pandemic restrictions, providing a boost to the global economy,” the IMF said in an annual assessment of the Chinese economy.
“That’s good news for China and the world as the Chinese economy is now expected to contribute a quarter of global growth this year,” it said.
On 19 January, IMF Deputy Managing Director Gita Gopinath had said China could see a sharp recovery in economic growth from the second quarter onwards based on current infection trends after the dismantling of most COVID-19 restrictions. Gopinath said that a growth rate “in the 4 percent-plus ballpark” would likely mean that any global inflationary pressures would be counter-balanced by the slowdown in demand elsewhere.
Meanwhile, the Chinese economy grew 3.0 percent in 2022, one of its worst economic performances in nearly half a century, hit by strict COVID curbs and a property market slump. Some economists as polled by Reuters see Chinese growth in 2023 at around 4.9 percent, with some of them recently upgrading forecasts to around 5.5 percent.
Authorities in China have said the soaring virus case numbers that accompanied the reopening have now passed their peak, with a travel surge prompted by the biggest Lunar New Year holiday in years offering a much-needed boost to business.
However, Friday’s assessment also warned of “significant economic challenges” ahead.
“The contraction in real estate remains a major headwind, and there is still some uncertainty around the evolution of the virus,” IMF said.
The property sector, which along with construction accounts for more than a quarter of China’s GDP, has been hit hard since Beijing started cracking down on excessive borrowing and rampant speculation in 2020.
“Longer-term, headwinds to growth include a shrinking population and slowing productivity growth,” the IMF said.
Morgan Stanley too raised Chinese economic growth forecast 0.3 percentage points to 5.7 percent from the earlier 5.4 percent, Reuters has reported citing the company’s analysts in a note published on 10 January.
The median estimate in a Bloomberg survey of economists is for growth to accelerate to 4.8 percent this year, some major banks like Bank of America and Citigroup Inc. expect growth to be closer to 5.5 percent or higher.
Meanhwile, China’s population shrank last year for the first time in more than six decades, official data released last month showed, and the nation of 1.4 billion has seen birth rates plunge to record lows as its workforce ages.
The slowdown in global demand, the uncertainties of the war in Ukraine and geopolitical tensions are the “main risks” to Chinese growth this year, the IMF said.
(With inputs from agencies)
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