Investing.com - Four prominent Western banks have adjusted their GDP growth predictions for China in light of recent data indicating that the country's economic recovery from the pandemic is slowing down. UBS Group AG (NYSE:UBS), Standard Chartered PLC (LON:STAN), Bank of America Corp (NYSE:BAC), and JPMorgan Chase & Co (NYSE:JPM) now predict a GDP growth rate between 5.2% and 5.7% this year, compared to their previous estimates ranging from 5.7% to 6.3%.
Economic data revealed that industrial production and retail sales growth underperformed expectations in May, leading analysts to believe that additional support measures might be necessary for China's economy to regain its footing after the pandemic crisis.
Last year, the Chinese government failed to meet its GDP target; however, they have set a more conservative goal of approximately 5% for this year.
UBS economists reduced their forecast from 5.7% down to 5.2%, suggesting that further policy intervention could be on the horizon.
In response to these developments, China's central bank decreased interest rates on one-year medium-term lending facilities – marking the first such move in nearly a year – which could potentially lead to reductions in benchmark loan prime rates next week.
Standard Chartered also modified its prediction for China's economic growth next year: lowering it from an initial estimate of 5.8% down to just over half at around current levels (i.e., around $0). In addition, they anticipate modest stimulus efforts aimed at improving business conditions while boosting confidence among both domestic businesses as well as foreign investors alike.
Both BoA and JPMorgan likewise revised their 2023 GDP growth expectations for China – the former reducing its estimate from 6.3% to 5.7%, and the latter trimming its projection from 5.9% down to just under half (i.e., around $0).
Despite these downward revisions, it is expected that Chinese authorities will introduce further stimulus measures aimed at bolstering consumer demand and supporting private sector businesses throughout this year's economic recovery process.