Wall Street turns even more bullish on China's economy as the end of zero COVID boosts growth
- Some of Wall Street's top banks raised their forecasts for China's economy this week.
- JPMorgan, Citi, and UBS expect a spending boom after Beijing lifted its zero-COVID policies.
Wall Street's top banks expect China's economy to shine for the rest of 2023, after the country released an impressive first-quarter gross domestic product (GDP) headline figure on Tuesday.
JPMorgan, Citi, and UBS have all lifted their growth forecasts in recent days after China's National Bureau of Statistics said the country's economy expanded by 4.5% year-on-year during the three months ending March 31.
They all expect the end of Beijing's harsh zero-COVID policies to fuel a rise in consumer spending on goods and services — a key driver of economic growth.
China ended its highly restrictive containment policies at the end of last year after widespread anti-lockdown protests broke out in major cities including Beijing and Shanghai.
Economists polled by Refinitiv expected the Chinese conomy to expand by 4% in the first quarter – so Tuesday's GDP figure outperformed Wall Street's expectations.
JPMorgan raised its growth forecast from 6% to 6.4% after China beat expectations, while Citi lifted its GDP target from 5.7% to 6.1%.
UBS also turned more bullish on China's economy, raising its year-end prediction to 5.7%. It attributed the increase to an expected rise in consumer spending now that harsh lockdowns across the country have ended.
"We continue to expect consumption to drive China's economic recovery this year," a team led by the Swiss bank's CIO, Mark Haefele, said in a research note seen by Insider. "We expect China's GDP to peak around 8% in the second quarter before easing to around 5.5% in the second half of the year."
"This will bring the full year GDP growth to at least 5.7%, in our view," the strategists added.