Exploring the plausible ‘What Ifs’ to our 2023 China GDP forecast

On the back of China’s recent consumption outperformance, we now expect the economy to grow by at least 5.5% in 2023. Market forecasts vary considerably, reflecting differences in assumptions around policy risk, the health of and outlook for the property sector, and the size and longevity of the reopening consumption boost.
What you will learn:
- As a thought experiment, we analysed five probable alternative scenarios using our Global Economic Model to gauge both the upside and downside risks to our 2023 outlook for China, and find a variance of around -0.7ppts to 1.5ppt to our 5.5% baseline growth forecast.
- Our analyses also demonstrate the clear limitations of policy easing, which in our downside scenarios prove insufficient to fully offset growth headwinds.
- In our base case and notwithstanding the eventual fading of a post-Covid consumption boost, growth in 2023 should comfortably exceed the official growth target. The unusual combination of a strong organic growth and still-significant economic headwinds (particularly towards H2) means that China’s monetary and fiscal policy stance could stay on hold for longer.

Tags:
Related posts

Post
Japanification risk – down, but not out
Our updated analysis shows that the risk of 'Japanification' – a lengthy period of low growth and low inflation or deflation – has increased in Asian economies like China but declined in Europe. However, some of the changes may not be permanent. Economies are still settling down after the upheavals of the pandemic and some key underlying drivers of Japanification remain in place.
Find Out More
Post
US Tariff Monitor – Sooner rather than later
President Trump launched the first salvo in what will like turn into another global trade war. A 10% additional tariff on imports from China went into effect on February 4 and the Chinese responded with a series of retaliatory steps.
Find Out More
Post
Chinese policy is unlikely to shift due to announced tariffs
US President Donald Trump's announcement of an additional 10% tariff on imports from China was in line with our baseline expectation. But the immediacy of implementation, the blanket style of tariffs, and the inclusion of stronger language around retaliation in policy documents still add significant uncertainty to our forecasts.
Find Out More