Nomura: Q3 Growth Beats Expectations, But It's No Time To Become Complacent

In the wake of the Q3 GDP data Nomura note that “China’s economy has recently been showing signs of stabilization, as evidenced by the raft of other headline data, including trade, credit and electricity consumption.”

• “Considering the low base in Q4, achieving that annual growth target should not be a huge challenge. We thus raise our 2023 GDP growth forecast to 5.1%.”
• “However, in our view, these positive signs might be driven by base effects, price factors or sample bias to some extent. Moreover, the stabilization is not very broadly based, as CPI inflation fell short of market expectations again.”
• “Beijing may have also shifted to wait-and-see mode, as it assesses the impact of the stimulus measures rolled out over the past few months, adding to the risks of a slowdown in Q4 and spring 2024.”
• “We believe it is still too early to call the bottom, as pent-up demand for travel and gatherings may fade notably after the Golden Week holiday, the property sector has yet to truly recover, highly restrictive interest rates in developed markets may finally weigh on the global economy, and market confidence in China’s economy remains depressed.”
• “We expect a slowdown towards year-end or in early 2024, and Beijing may have to step up its efforts to stabilize growth again at that time. We maintain our below consensus 3.9% forecast of 2024 annual GDP growth.”