People ride scooters on a street at Beijing’s Central Business District, in Beijing, China June 21, 2023. REUTERS/Tingshu Wang/File photo
BEIJING – S&P Global has revised down its forecast for economic growth in China this year, highlighting the uneven nature of the country’s recovery after reopening and increasing calls for additional stimulus. S&P now predicts that China’s GDP growth for 2023 will be 5.2 percent, down from the previous estimate of 5.5 percent. This marks the first reduction in forecast by a global credit ratings agency this year, following similar downward revisions by Goldman Sachs and other major investment banks.
In a statement released on Sunday, S&P stated that China’s major growth risk is the potential loss of momentum in its recovery due to weak consumer confidence and the struggling housing market. Despite a resurgence after three years of restrictive zero-COVID policies, the world’s second-largest economy has faced recent setbacks, such as a decline in property investment, lower-than-expected industrial output and retail sales growth, and a record-high youth unemployment rate of 20.8 percent in May.
Projections for China’s GDP growth in 2023 vary between 4.4 percent and 6.2 percent. To boost the economy, S&P suggests possible measures such as easing housing purchasing restrictions and mortgage down-payment requirements, expanding credit and infrastructure financing, and potentially providing fiscal support for consumption.
Ning Jizhe, a senior economic official and former head of China’s statistics bureau, is among the policy advisers advocating for additional supportive measures. At a forum in Beijing on Sunday, he emphasized the importance of implementing measures sooner rather than later. Last week, China reduced its key lending benchmarks for the first time in 10 months, and the People’s Bank of China (PBOC) had already lowered short- and medium-term policy rates the week before.
Sources involved in policy discussions have suggested that the world’s second-largest economy will enact further stimulus measures this year. State-run securities newspapers published front-page articles last week, quoting economists who predicted that the PBOC would likely continue to ease monetary policy. Additionally, the state-controlled Global Times reported over the weekend that many graduates are turning to temples to pray due to increasing anxiety over job prospects.
Market analysts widely anticipate the announcement of stimulus policies following a regular meeting of the Communist Party’s political bureau in July. Nie Wen, an economist at Hwabao Trust, noted that the government is allowing more calls from state media to build public support and raise expectations for additional stimulus.
The current pessimism surrounding the Chinese economy is reflected in the slumping China and Hong Kong stocks on Monday, following disappointing domestic tourism figures for the recent three-day Dragon Boat Festival. The yuan also weakened against the dollar.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
