China: Growth may reach 4.9% in 2023, stimulus measures expected – 01/12/2023, 15:51

Photo of people walking on the street in Shanghai

By Kevin Yao

BEIJING (Reuters) – China’s economic growth, shaken by the effects of the “Zero COVID” policy, should recover to 4.9% this year thanks to new measures planned by Beijing before stabilizing next year. request.

China’s gross domestic product (GDP) is likely to grow by just 2.8% in 2022, as health restrictions linked to the COVID-19 outbreak have weighed on household and business activity and confidence, according to a forecast media of 49 economists polled by Reuters.

In October, economists were still forecasting economic growth of 3.2% in 2022 for China, after growth of 8.4% in 2021.

China’s leaders have vowed to boost growth in the world’s second-largest economy this year as they grapple with headwinds such as a zero-Covid policy and a major slowdown in the real estate sector.

Most of the restrictions related to COVID-19 were lifted in December, but the hasty end of three years of strict health policies led to the spread of contamination with the SARS-CoV-2 virus.

“We expect economic activity and consumption to pick up strongly in March-April, supported by the post-Covid reopening and the release of excess (household) savings,” said Tao Wang, chief China economist at UBS.

“The lack of large-scale income and consumption stimulus is likely to limit the rebound,” he said.

China’s expected growth rate for 2022 should be well below the official target of 5.5%, according to a Reuters poll. Barring a 2.2 percent growth rate in 2020 after the initial shock of the COVID pandemic, 2022 is expected to mark the worst annual performance for the Chinese economy since 1976.

According to survey estimates, GDP grew by only 1.8% year-on-year in the fourth quarter of 2022, thanks to the strengthening of anti-Covid measures, against 3.9% growth in the third quarter.

The study also shows that quarter-on-quarter, the economy is expected to contract by 0.8% in the fourth quarter, compared with 3.9% growth in the July-September period.

Official GDP statistics for the fourth quarter and December 2022 will be released at 02:00 GMT on January 17.

At a closed-door meeting in December, China’s leaders pledged to focus on stabilizing the economy this year, pledging to step up reforms to ensure key goals are met.

According to government sources, China needs to target economic growth of at least 5% in 2023 to avoid unemployment.


China’s central bank has promised “special and strong” policies this year to support the economy, maintain ample liquidity and reduce financing costs for companies.

Analysts expect China’s central bank to cut its one-year lending rate by five basis points (bps) in the first quarter.

The Central Bank decided on December 20 to keep the exchange rate unchanged for the fourth month in a row, a decision that was in line with the forecasts of most market observers, who nevertheless expected further monetary easing to support the slowing Chinese economy.

The mandatory reserve ratio for banks was reduced by 25 basis points on December 5, which was decided by the central bank last year.

“Economic policy should be more supportive in 2023. We expect credit growth to be 11-12% in 2023, up from 9.6% in 2022, thanks to improved bank sentiment and credit demand,” said Larry Hu, chief China economist. . at Macquarie.

“Fiscal policy could also be more accommodative with a record number of special bonds for local authorities.”

Consumer price inflation in China is expected to accelerate to 2.3% this year from 2.0% last year, before stabilizing in 2024, according to a Reuters poll.

(Research by Anant Chandak, Veronika Khongwir and Devayani Sathyan in Bangalore and Jing Wang in Shanghai; reporting by Kevin Yao; French version by Claude Chendjou, Editing by Kate Entringer)

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