Bank of America cut its China growth forecast on Tuesday in response to heightened troubles at property giant Evergrande, a fresh COVID outbreak, and a regulatory crackdown.
- As BoA cut its real gross domestic product (GDP) growth forecast for China for this year to 8.0% from 8.3%, it reserved its biggest cut for 2022 to 5.3% from 6.2%. It also cut its 2023 economic outlook to 5.8% from 6.0%.
- Boora’s downgrades come as economic headwinds that have been expanding for China’s $14.5 trillion economy and indicate a growing concern that Evergrande’s troubles could expand the impact.
- Recent weak data, including retail sales and factory output, also signaled a downturn in the country’s economy due to supply chain constraints and COVID-19.
- Standard Chartered and ING stated last week they considered inadequate policy support as a major downturn risk to their GDP forecasts and pushed for a 50 basis point cut to PBOC’s reserve requirement ratio in Q4.
China’s real estate sector has come under scrutiny since the risk of debt-riddled Evergrande defaulting increased, with markets dropping on Monday over its consequences.
CSI 300 Index down -0.70%, CNY USD down -0.01%
Source: Reuters
