Analysts expect China's GDP to grow by 5.1% in 2023

Experts continue to assess China's prospects very cautiously, continuing to adjust forecasts for GDP growth and inflation. According to the consensus forecast of analysts, China's economy will grow by 5.1% in 2023.

Earlier, analysts had expected GDP growth of 5.2%. The downgrade of the forecast is partly due to the deterioration of expectations for the third quarter: economists on average predict an increase in China's GDP in July-September by 4.4% in annual terms, and not by 4.6%, as it was earlier.

Experts note that weak indicators of investment in housing construction and export dynamics have a detrimental effect on the growth momentum of the Chinese economy. Some analysts even predict China's growth of only 4.9%.

At the same time, despite Beijing's attempts to support growth with the help of budgetary and monetary incentives, there is a probability of a «hard landing» of the Chinese economy this year – the probability of this scenario is estimated at 30%.

The forecasts also take into account that the People's Bank of China is likely to reduce the rate on medium-term loans (MLF) by another 10 basis points (bp) in the fourth quarter of this year. The reserve rate for banks may also be reduced by 25 bps in the current quarter, in an attempt to improve the liquidity situation.

As for inflation, the consensus forecast of the surveyed analysts for the current year is now 0.7%, with the expectation of a decrease in producer prices by 3%, exports by 3% and imports by 5.6%.