(Reuters) -Citigroup and J.P.Morgan raised their forecasts for China’s annual growth on Wednesday, citing stabilizing economic indicators and Beijing’s recent supportive policy measures.
The Wall Street brokerages raised their forecast for gross domestic product growth to 5%, in line with China’s target rate for 2023, and said the slowdown in the world’s second largest economy has ‘hit a bottom”.
Policy momentum since August end has exceeded expectations, Citi economists said in a note, citing a cut in personal incometax, as property prices ease in Tier-1 cities and home loans get repriced.
The brokerage expects retail sales to improve and industrial production to hold steady following a rebound in factory activity.
The upbeat view is a shift from its previous stance in August where it cited disappointing policy support and worries of contagion from the property crisis to cut its forecast for full-year growth to 4.7%.
“Further policy measures could be announced such as product-specific consumption support and further relaxation of administrative controls in the housing market,” JPM economist Haibin Zhu said.
“We would also watch out for a policy scheme (debt swap or debt restructuring) to deal with local government hidden debt.”
Zhu said policy measures to support the surviving private developers could also be introduced.
(Reporting by Susan Mathew in Bengaluru; Editing by Savio D’Souza and Arun Koyyur)