International investment firms have been constantly adjusting their GDP forecasts for China throughout the year, with JPMorgan making six changes since January, according to CNBC analysis. The average prediction among six firms studied by CNBC now stands at 5.1%, which is close to the “around 5%” target announced by Beijing in March.
However, recently released economic data suggests slower growth than expected, leading to the investment banks revising their forecasts downwards. In July, JPMorgan cut its China GDP forecast to 5%, down from 5.5% previously. Citi and Morgan Stanley also made cuts this month, bringing their forecasts to 5%.
The continuous changes in GDP forecasts highlight the uncertainty surrounding China’s economic trajectory. The disappointment in second-quarter GDP growth can be attributed to official revisions to China’s quarter-on-quarter growth last year.
The accuracy of China’s official data has long been questioned, and the statistics bureau has issued statements about punishing local governments for falsifying data. To complement official data, some researchers have turned to alternative sources like the U.S.-based China Beige Book, which regularly surveys businesses in China to provide reports on the economic environment.
Investment banks’ predictions of blockbuster growth in China may have been influenced by business interests and a reluctance to publish critical views. Nonetheless, analysts still expect growth in the world’s second-largest economy to pick up in the longer term, with a cyclical rebound anticipated in early 2024.
While international investment firms continue to revise their forecasts, Chinese officials have reiterated their confidence in achieving their annual growth target of around 5%. The World Bank and the International Monetary Fund also release regular economic forecasts for China, but their reporting schedules may not fully align with the current economic situation.