Private Banks

UBS downgrades China 2022 GDP growth forecasts

UBS investment bank economic research team downgrades 2022 GDP growth forecasts to 2.7% and 2023 growth to 4.6% on lackluster Q3 recovery and ongoing property downturn.


“We now expect Q3 recovery to be weaker than envisaged earlier, at 10% q/q SAAR and 2.6% y/y. While some of the current policy support will bear more fruit in Q4, the Covid situation will likely remain challenging into the winter and early 2023, and export growth is set to slow.We now forecast 2.7% real GDP growth in 2022 and 4.6% growth in 2023. The latter assumes notable easing of Covid restrictions from March onwards and stabilization of property activities soon,” said Dr Tao WANG, Head of Asia Economics and Chief China Economist of UBS Investment Bank Research (瑞銀投資銀行亞洲經濟研究主管暨首席中國經濟學家).


As the USD strengthened further in recent weeks, USDCNY onshore spot finally broke through 7 on September 16, though still relatively strong against other major currencies. Given the diverging US-China monetary policy trajectories and slowing Chinese exports, Tao sees USDCNY to trade around 7.15 at end 2022. In 2023, especially in the second half, we expect the changing dynamics to drive a stronger CNY, with USDCNY at around 7 by end year.