Citi raises its forecast for China’s GDP growth, bringing it closer to the official target

Real estate and related sectors account for at least 25% of China’s economy, according to Moody’s.

China's economy is facing a lot of new pressure from Covid that may lead to Beijing increasing its stimulatory measures.

The strong start of the year and the anticipated government support has led to a revision of our growth forecast from 4.7% to 5.0%.

The official gross domestic product target was announced in early March and the new forecast is closer to it. Retail sales, fixed asset investment, and industrial production all increased in China during the first two months of the year.

According to the report, the upgrade to Citi's GDP forecast comes on the back of expectations of investment in projects such as infrastructure and affordable housing.

The official Purchasing Managers Indexes for manufacturing and services businesses both fell into contraction territory in March. It is the first time since February 2020 that both indexes have done it.

The current Omicron wave is the worst in years, but it appears to have less of an impact than was thought.

He said that China is adapting to minimize the economic costs while implementing the policy.

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According to data released Friday, the Caixin manufacturing PMI, a third-party study that covers more smaller businesses than the official survey, fell into contraction territory in March and its lowest since February 2020.

Yu expects policymakers to support the struggling real estate industry. Beijing can't afford to wait any longer on stabilizing the property market with measures such as looser credit policies, he said.

The last few months have seen a decline in housing sales. Moody's says that real estate and related sectors have accounted for 25% of China's economy.

The People's Bank of China is expected to cut interest rates this month.

China has a very ambitious growth target to meet by the end of the year, according to Carlos Casanova, senior Asia economist at UBP.

If they don't implement another round of rate cuts in April, it will be very difficult to achieve the goal.