J.P.Morgan Revise Up Full-Year GDP Growth Forecast To 5.2%

J.P.Morgan write “today’s economic data is overall encouraging. For the first time since April, China’s economic growth returned to above-trend path.”

• “Policy tailwind sectors remain strong; export volume has returned to positive growth; the recovery in retail sales is particularly encouraging, supported by deployment of excess savings.”
• “Our full-year 2023 growth forecast is now 5.2% (previously: 5.0%), above this year’s official growth target.”
• “From the cautious side, there is no clear evidence that the weak links in the economy have been fixed.”
• “Another challenge is the growth outlook in the coming years.”
• “We have argued that the change in policy direction is more important. First, a more transparent, stable and predictable policy environment is important to restore the confidence among private entrepreneurs, and to encourage innovations from non-SOE sectors. Second, against the backdrop of deflation pressure, policy support should shift the bias from supporting investment to supporting consumption. Third, regulatory headwinds in high and middle-end service sectors have contributed to various problems in the economy, hence pragmatic policy adjustment to equally support service upgrade and manufacturing upgrade is also important.”
• “On the macro policy front, a ‘bazooka-like’ policy stimulus is unlikely and undesirable, in our view. Meanwhile, it is important to maintain the momentum of policy support. In the near term, room for monetary easing is constrained by global financial conditions tightening, hence we expect fiscal policy will take a leading role.”