BEIJING (Reuters) – Nomura 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 policymakers 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.
(Reporting by Kevin Yao; Editing by Kim Coghill)
