Economists now think China will miss growth expectations

investmentnews.com:

China’s economic outlook is showing no signs of improvement, with forecasters broadly trimming their expectations for growth, prices and trade and predicting more monetary policy easing.

Economists now see gross domestic product expanding 5.1% in 2023 from the prior year, according to the median estimate in the latest Bloomberg survey. That’s down from an earlier expectation of 5.2% and brings projections closer to the government’s target of about 5% — a number widely seen as conservative when it was set in March. 

The downgrade is attributable in part to lower projections for growth in the third quarter: Economists now see GDP expanding 4.4% in the July-to-September period from a year ago, down from an earlier expectation of 4.6%. Growth is expected to slow to 4.5% in 2024, down from a projection of a 4.8% expansion previously. 

The growth momentum is slowing “due to a worsening residential property investment decline and a drag from poor export numbers,” said Mike Gallagher, director of research at Continuum Economics. The research firm sees GDP expanding 4.9% this year. 

China has as much as a 30% chance of experiencing a “hard landing” this year despite the nation’s efforts at stimulating the economy using fiscal and monetary policy, Gallagher added. 

The pessimism comes as recent data showed the economic outlook worsening for China. Bank loans plunged to a 14-year low last month, while deflation is setting in and exports are contracting. 

The weak economic figures have spurred some action by Chinese officials. The People’s Bank of China this month lowered the rate on its one-year loans by the steepest amount in three years. But even with that interest rate cut — the second this year — Beijing has refrained from