Wall Street revised China's GDP forecast multiple times this year, with one bank making six adjustments

As per CNBC’s analysis of international investment firms’ notes, China GDP forecasts have been consistently revised almost every month this year, with JPMorgan leading the pack with six adjustments since January. JPMorgan has not yet responded to a request for comment on this matter.

In its most recent update, the leading U.S. investment bank reduced its China GDP forecast to 5% in July, down from the previous estimate of 5.5%. Concurrently, this month, both Citi and Morgan Stanley also lowered their GDP forecasts for China to 5%.

Among the six firms analyzed by CNBC, the average GDP prediction now stands at 5.1%, closely aligning with the “around 5%” target announced by Beijing in March.

Citi’s most recent forecast represents the firm’s fourth alteration this year, while Morgan Stanley has made just one adjustment since setting its forecast in January.

During the same period, Nomura adjusted its forecast four times, UBS made three adjustments, and Goldman Sachs revised its forecasts twice.

The investment banks mainly raised their forecasts earlier this year, observing China’s initial rebound following three years of strict Covid controls.

The recent quarter-on-quarter revisions reflect the latest economic data, indicating slower growth than anticipated, and authorities appear hesitant to implement significant stimulus measures. In the second quarter, GDP increased by 6.3% compared to the previous year, falling short of the 7.3% growth projected by analysts polled by Reuters.

Rhodium Group’s Logan Wright and their team attribute the disappointment in second-quarter GDP growth to official revisions made to China’s quarter-on-quarter growth from the previous year.

According to a report from July 17, the analysts stated that the resulting low figure allows Beijing to present a case for supporting the economy.

They highlighted that this year’s GDP data should be interpreted as artificially constructed narratives aimed at different audiences, rather than accurate reports of China’s economic performance.

CNBC’s request for comment from the National Bureau of Statistics did not receive an immediate response.

Rather than providing multiple readings of data, the bureau releases quarterly GDP figures shortly after the period ends and subsequently makes revisions.

The statistics bureau has also issued public statements regarding its intention to penalize local governments for falsifying data. The accuracy of official data in China has been a topic of long-standing scrutiny.

On Friday, Goldman Sachs acknowledged the seasonal revisions but kept its growth forecast for China at 5.4%. The bank stated that, overall, the surprises in the data were not significant or consistent enough to warrant major adjustments to their China growth forecast for this year.

In efforts to assess growth, researchers have explored non-official data sources. One such organization is the U.S.-based China Beige Book, which conducts regular surveys of businesses in China to produce reports on the economic landscape.

According to Shehzad Qazi, the New York-based managing director at China Beige Book, earlier this year, their data revealed that there was no evidence of a revenge spending wave or an extravagant recovery.



Source : cnbc.com

By Ryan

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