Nomura cut China GDP Growth Forecasts

Nomura write “i n view of the worsening downward spiral of major activity data and Beijing’s tepid response to date, we lower our GDP growth and inflation forecasts.”

• “We expect Beijing to introduce a raft of supportive measures after the rate cut this week and believe it will increasingly play the role of borrower and spender of last resort.”
• “However, these measures may not turn things around, due to weak confidence, negative sentiment, the huge fiscal cliff due to the collapse of land sales, clogged transmission channels, a shrinking tool box, slow decision-making on economic matters and conflicts among multiple targets.”
• “Simply put, we believe markets should curb their expectations for a fast, cure-all package and instead embrace expectations of a growth slowdown towards 4.0% or even lower in coming quarters.”
• “We lower our GDP growth forecasts to 5.1% and 3.9% in 2023 and 2024, respectively, from 5.5% and 4.2%.”
• “Due mainly to weak demand, we cut our annual CPI and PPI inflation forecasts to 0.5% and -2.7%, respectively, from 0.8% and -2.1% for 2023.”