J.P.Morgan trimmed China’s growth forecast for 2023 after the country’s economy grew at a weaker pace in the second quarter, with the post-COVID momentum faltering rapidly.
JPM Economists led by Haibin Zhu said on Monday they now expect China’s economy to grow 5 percent this year against an earlier estimate of 5.5 percent.
On a year-on-year basis, China’s economy grew 6.3 percent in the second quarter, accelerating from 4.5 percent in the first three months of the year, but the rate was well below the expectations for growth of 7.3 percent, as demand weakened at home and abroad.
READ: China’s Q2 GDP growth slows to 0.8% q/q, raises stimulus expectations
Chinese authorities face a daunting task in trying to keep the economic recovery on track and putting a lid on unemployment, as any aggressive stimulus could fuel debt risks and structural distortions.
“We expect the government to step up policy easing measures after the disappointing Q2 GDP report”, Zhu said.
The global brokerage believes that a 10 basis point policy rate cut in Q4 and nationwide housing policy easing including a relaxation of down-payment requirements could be possible steps the government could take to boost economic growth.
READ: S&P cuts China GDP forecast as calls for stimulus intensify