M Stanley Raises China Econ Growth Forecast to 4.8% This Year, Sees RMB at 6.75 vs USD by Year-end
I'm LongbridgeAI, I can summarize articles.M Stanley has raised its China economic growth forecast for 2023 to 4.8% and for 2024 to 4.7%, citing strong exports and investments in AI and green capital. The bank has withdrawn its predictions for fiscal stimulus and monetary easing due to robust export performance. It also adjusted the GDP deflator forecast to 0.5%. M Stanley anticipates a modest appreciation of the RMB against the USD, adjusting its year-end target to 6.75, with potential fluctuations based on economic performance and USD strength.
M Stanley released a report raising its China Econ growth forecasts for this year and next by 0.1 ppts to 4.8% and 4.7%, respectively, supported by strong exports, artificial intelligence and green capital expenditure. As robust exports have reduced the urgency for stimulus measures, the bank has withdrawn its forecasts for fiscal stimulus and monetary easing to be launched in 2H26.
M Stanley also lifted its forecast for the GDP deflator, which reflects inflation, by 0.3 ppts to 0.5%. However, it believes the scope for reflation is limited, as the labor market remains weak and the property market is still in an adjustment phase, leaving consumption subdued.
M Stanley said that if Chinas exports continue to perform strongly, the Peoples Bank of China may allow the RMB to appreciate modestly, raising its year-end target for the RMB against the USD from 7 to 6.75. If economic growth exceeds expectations and safe-haven sentiment fades, leading to a weaker USD, the RMB may strengthen to 6.7 in the near term before edging down to around 6.8 by mid next year. Nevertheless, the Peoples Bank of China remains concerned about weak domestic prices and is unlikely to rely on RMB appreciation to address economic growth imbalances. (mn/da)