Fitch Ratings has raised its forecast for China’s GDP growth in 2023 from 5.2 percent to 5.6 percent. The revision comes after a stronger-than-expected reopening rebound in the first quarter of the year.
China’s GDP expanded by 4.5 percent year-on-year in the first quarter, surpassing the estimated 2.8 percent growth projected in a previous report by Fitch Ratings in March.
The credit rating agency notes that consumption, property sales, and exports all recovered rapidly in February and March, contributing to the robust rebound. Although macro data releases for April and May showed some slowing, Fitch Ratings believes the overall growth recovery driven by normalization of consumer spending remains intact.
Retail sales continued to expand strongly in May, and consumer confidence surveys have started to recover. Additionally, household income prospects are expected to improve as labor demand recovers and the unemployment rate falls. The property sector is also showing signs of stabilization, with housing completions picking up, suggesting that stalled projects are resuming.
Fitch Ratings also highlights the authorities’ willingness to provide macro policy stimulus to support growth. The People’s Bank of China recently implemented rate cuts and further reductions in banks’ reserve requirement ratios are likely. With consumption recovering and the drag from falling construction activity easing, domestic demand growth is expected to pick up in 2023.
It’s important to note that economic forecasts are subject to various factors and uncertainties, and the actual growth outcome may differ from projections.