Dong Chen, Head of Asia Macroeconomic Research, at Pictet Wealth Management.
- The Chinese government has finally started to change some of the policies that have inflicted massive pains on the economy over the past one and a half years. The recently announced financial support to property developers will likely lead to stabilisation in this sector in the coming months so that it may be less of a drag on the economy in 2023.
- The government has also swiftly pivoted towards re-opening after a wave of large-scale protests against stringent covid controls broke out across the country. This could be a messy process that lasts one to two quarters, but we expect a stronger rebound in the economy in the second half of 2023 after it has fully re-opened.
- Monetary policy will likely stay supportive with additional rate cuts, but the space for further fiscal easing may be limited.
- Our Chinese GDP forecast in 2023 stands at 4.5% and our forecast for headline inflation at 3.0%.