JPMorgan lowers China’s 2023 growth forecast to 5% from 5.5%, expects RRR cut in Q3, rate cut in Q4
MACRO VIEWS & ANALYSIS
JPMorgan lowers China’s 2023 growth forecast to 5% from 5.5%, expects RRR cut in Q3, rate cut in Q4
MACRO VIEWS & ANALYSIS

JPMorgan lowers China’s 2023 growth forecast to 5% from 5.5%, expects RRR cut in Q3, rate cut in Q4

 

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China’s GDP growth in the second quarter of the year reached 6.3%, well below market expectations, said JPMorgan in a note. 

Following the disappointing economic data in April and May, the data for June showed a moderate improvement in industrial activity and particular in fixed-asset investment in infrastructure and manufacturing driven by policy support, thoughreal estate market and private fixed-asset investment remained weak, it said.

In anticipation of moderate policy easing, the bank maintained its forecasts for China’s GDP growth in the third quarter and the fourth quarter, but revised down its 2023 GDP growth forecast to 5% from 5.5%.

On the monetary policy front, JPMorgan expects that the PBOC will cut its policy rate by another 10 basis points in the fourth quarter, opening up room for market rates to move lower. 

The broker maintained its forecast of a 25 basis point cut in the required reserve ratio (RRR) in the third quarter, probably July, and a 9.8% growth in social financing for the full year. It also expects the PBOC to expand structural monetary policy operations to support targeted sectors.