Deutsche Bank has raised its 2017 growth projection for China following release of Q1 data by the Chinese central bank.
Data released by China’s National Bureau of Statistics on 17 April indicate that Q1 economic growth outpaced consensus expectations,with a year-on-year rise of 6.9% to reach 18.07 trillion yuan (USD$2.63 trillion).
Deutsche Bank has since revised its full year GDP growth projection for China upwards from 6.5% to 6.7%.
Zhang Zhiwei, Deutsche Bank’s chief economist for the Greater China Region, said the adjustment was prompted by the strong performance of multiple economic indices during the first quarter, in particular the continued robust momentum of the Chinese property sector.
External demand is improving while growth in consumption and infrastructure investment are all holding steady
Zhang points out, however, that there could be a modest slackening in GDP growth over the year’s remaining quarters from 6.9% in Q1 to 6.8% in Q2, 6.6% in Q3 and 6.5% in Q4, chiefly due to slowing credit extension.
Deutsche Bank analysts do not anticipate any sizeable fallback in economic growth over the next two years, despite lack of concerted fiscal stimulus measures, and increased likelihood of an interest rate hike next year.
While Chinese authorities will ratchet up their regulation of the property and finance sectors, as already evidenced by the China Banking Regulatory Commission’s recent sweep of the lending sector, monetary policies will continue to support growth, with Deutsche Bank sees 6.3% GDP growth next year.