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Sell-Side Views Post Q1 China GDP


J.P. Morgan And Goldman Sachs viewpoints post the Q1 GDP beat yesterday. Both banks maintain upbeat full year profiles but see momentum slowing in H2.

J.P. Morgan: "The strong 1Q GDP report points to a strong post-reopening recovery. A range of factors have led the strong rebound in 1Q activity, including a notable rebound in travel-related consumption and services; front-loaded macro policy support; stronger-than-expected export sector performance, as well as earlier-than-expected bottoming out of housing activity."

"Looking ahead, we maintain our growth forecasts at 6.3%, 4.9% and 4.9%q/q saar, respectively, from 2Q to 4Q. The post-reopening recovery should continue in the near term, and we expect the growth momentum will soften into 2H amid external sector uncertainty and as the front-loading of macro policy support turns into a drag later this year. On the back of the stronger-than-expected 1Q GDP report, our full-year GDP growth forecast now stands at 6.4%yoy (previously: 6.0%)."

Goldman Sachs: "Strong Q1 GDP and March activity data, in addition to the continued strength showed by our high-frequency trackers, suggest a very strong growth recovery in China, thanks to the frontloading of reopening impulse and policy support, but we caution some strengths, such as pent-up demand and catch-up production post the Covid "exit wave", may fade sequentially in coming months. Taking into consideration NBS revisions to historical sequential GDP growth estimates (including H1 and Q4 2022), stronger-than-expected Q1 GDP and the above-mentioned rationale, we revise down our Q2 GDP growth forecast to 4.9% qoq sa annualized from 5.5% previously, with other quarterly sequential growth forecasts unchanged. Our full-year GDP growth forecasts remain intact for 2023-25, at 6.0%, 4.6% and 4.0%, respectively. In year-on-year terms, our Q2-Q4 2023 GDP growth forecast is 8.1%, 5.4% and 6.0%, respectively (vs. 8.0%, 5.2% and 6.5% previously)."

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