SocGen: 2023 GDP Back On Target, But Challenges Remain

Societe Generale note that "China's 3Q GDP growth came in stronger than market expectations."

• "Almost every aspect of the economy regained some strength. Consumption is recovering thanks to auto stimulus and reopening. Infrastructure investments are gathering pace on the back of stimulus. Exports are stabilising. Housing is still wobbly, but at least demand and construction have stopped falling further for now. It remains to be seen how long the stabilisation can continue."
• "With the upbeat 3Q GDP print, the full-year growth rate should be able to reach 5% if housing activity doesn't deteriorate again. Therefore, we revise our 2023 GDP forecast back up again, from 4.8% to 5.2%."
• "We now see even less reason for a beyond-budget fiscal expansion this year, while the likelihood of a higher central government deficit next year is high, given structurally depressed land sales and local government debt pressure."
• "The magnitude of the budget then depends on the government’s growth target for next year."
• "Currently, we expect 2024 GDP at 4% without big-bang stimulus. As for monetary policy, we maintain our call for one 10bp interest rate cut and one 25bp RRR cut by year-end."