With China’s economy growing less than expected in Q2, calls have intensified for the government to expand stimulus measures to revive growth. Several investment banks cut their growth targets for China this year after today’s disappointing Q2 GDP report. The markets will look to a meeting later this month when China’s Politburo will decide on economic policies for the rest of the year. However, the Chinese government has hinted that any new stimulus measures will likely be targeted and limited in scale.
Q2 China GDP expanded at a +6.3% y/y pace, weaker than expectations of +7.1% y/y. The weaker-than-expected report prompted several investment banks to cut their China 2023 GDP forecasts, citing major weakness in the recovery and the Chinese government’s muted stimulus-response. Citigroup lowered its China 2023 GDP forecast to 5.0% from 5.5%, Morgan Stanley cut their China 2023 GDP forecast to 5.0% from 5.7%, and JPMorgan Chase lowered its China 2023 GDP estimate to 5.0% from 5.5%.
