Nomura Cut ’23 GDP Growth Call

Nomura cut their 2023 annual GDP growth forecast for China to 4.3% from 5.1% for four reasons:

• “Beijing could either prolong its zero-Covid strategy (ZCS) or potentially handle millions of infections after March 2023 if it chooses to reopen.”
• “Exports might be a lot weaker on a global slowdown and post-Covid return to normalcy.”
• “The pace of recovery in the heavily battered property sector may be timid as the economy is clouded by the pandemic and Beijing may need to develop more effective tools to rescue this sector.”
• “The payback of the frontloading of passenger car sales will likely weigh on growth in 2023.”
• They maintain their “forecast of 2.7% annual GDP growth for this year, while slightly adjusting Q3 and Q4 growth to 2.8% and 2.8% from 2.6% and 3.3%, respectively. The upward revision of Q3 growth was a result of better than expected activity data in August, while downward revision of Q4 growth is based on the same reasons as cutting 2023 growth.”