Goldman Mark '23 GDP Forecast A Touch Lower On Revisions

Goldman Sachs note that “China's Q3 GDP and September retail sales data beat market expectations, suggesting continued improvement in sequential growth momentum from Q2's low.”

• “Year-on-year growth in retail sales improved in September, led mainly by stronger growth in offline goods sales and Covid-sensitive restaurant sales on favourable base effects.”
• “Industrial production growth remained stable in September amid improved export growth, with stronger power generation and electric machinery output largely offsetting weaker ferrous metals smelting and computer output.”
• “Fixed asset investment growth also rose in September, led again by infrastructure and manufacturing investment, but the magnitude of improvement was slightly smaller than expected, due partly to the prolonged drag from depressed property investment.”
• “Most property-related activity remained sluggish in year-on-year terms in September, while adjusting for base effects, new home starts and sales improved sequentially amid the ongoing housing easing.”
• “Taking into consideration the likely lagging effect of recent policy easing and solid high-frequency data for the first half of October, we slightly raise our sequential growth forecast for Q4 (to 5.5% qoq sa annualized from 5.0% previously).”
• “However, NBS revisions to historical sequential growth estimates mechanically lower our 2023 full-year GDP growth forecast marginally to 5.3% from 5.4% previously.”
• “Our 2024 and 2025 growth forecasts remain unchanged at 4.5% and 4.0%, respectively. These forecasts embed our assumption that policy easing on monetary, fiscal and property fronts will continue in coming months given the ongoing property headwinds and still-fragile confidence.”