NEW YORK: China’s 2023 economic growth target of around 5 percent unveiled at the “two sessions” is attainable, with potential for upside as the world’s second-largest economy stages a steady recovery, an analyst of Swiss banking giant UBS has said.
“The number is achievable,” given the economy’s promising outlook, Xingchen Yu, emerging markets strategist at UBS Chief Investment Office, told Xinhua. “The target reflects some prudence in the context of a global economic slowdown, but we do think there’s a potential upside driven by potentially faster than expected pace of economic recovery on both consumption and investment,” he said.
Yu said China’s economy is already off to a strong start in 2023, confirmed by encouraging indicators ranging from the box office and catering revenues to the purchasing managers’ index. “Some other indicators, including passenger traffic, domestic tourism revenue and international travel, have all picked up as well,” he said. Recent data showed the purchasing managers’ index for China’s manufacturing sector was 52.6 in February, rising for two consecutive months and marking the strongest level since April 2012.
In addition, China’s tourism revenues surged 30 percent year on year, and cinemas nationwide reported the second-highest box office figure on record during the week-long Spring Festival holiday in January, signaling improving consumer sentiment. “We do expect to see further evidence of recovery in the coming economic data release.
The overall trend should be positive,” he said. Yu said that a revival in consumption, continued infrastructure spending and pro-growth policies would provide tailwinds to the economy. He said he expects China’s consumption to grow by 7 percent this year and infrastructure investment growth to reach the high single digits.
“You got policy support still on the way,” as macroeconomic policies were signaled to stay supportive to boost domestic demand and fiscal policy was guided to be more proactive and effective, he noted, adding that the policy stance of supporting private businesses is crucial for shoring up market confidence.
Joining many other financial institutions, UBS has recently revised up its projection for the Chinese economy. It now anticipates China’s GDP growth of around 5.5 percent this year, higher than its previous forecast of about 5 percent. The robust comeback of the world’s second-largest economy will inject vitality into growth elsewhere, said Yu.
The pickup in China should benefit China’s neighbors in North and Southeast Asia, with a positive impact being felt both through trade and tourism revenues, he said. Yu added that commodity-sensitive emerging economies and developed countries with sizable exports to China should also be beneficiaries.