China’s Economic Growth Estimates Slashed Amid Confidence Slump

Investment Banks Cut Forecasts as Beijing Struggles to Meet 5% Target

Major investment banks are revising their growth estimates for China’s economy downward, predicting that the country may miss its official target of around 5% due to a decline in confidence in the world’s second-largest economy.

Bank of America has revised its growth forecast for China from 5% to 4.8%, while TD Securities has cut its estimate from 5.1% to 4.7%. These adjustments follow a series of similar corrections made over the summer, including UBS’s recent forecast cut.

Economists at Citi have warned that Beijing may fall short of its economic growth target, which is the lowest in decades. Concerns about China’s economy are growing, with the real estate sector facing a prolonged slowdown and consumer and investor confidence declining.

The median forecast for China’s annual GDP growth has fallen to 4.8% from 4.9% in mid-August, according to a Bloomberg survey of dozens of economists.

China’s Economic Growth: A Decades-Long Trend Reversal

Last year, the Chinese economy grew by 5.2%, in line with expectations. However, this year’s growth engine has shown signs of slowing down, with the economy facing a crisis of confidence.

For decades, China’s GDP growth has consistently exceeded government targets set at the beginning of each year. However, after the Covid-19 pandemic, these figures have come under closer scrutiny.

Weaker-than-expected second-quarter growth of 4.7% in July triggered a series of downward revisions to forecasts. Goldman Sachs, Citi, and Barclays have all cut their full-year growth estimates to 4.9%, 4.8%, and 4.8%, respectively. JPMorgan now expects growth of 4.6%.