UBS Group AG lowered its forecast for China’s gross domestic product growth this year as the property rebound weakens and the consumption recovery loses momentum, adding that more policy support may come by the end of next month.
The economy is now expected to grow 5.2% this year, down from a previous projection of 5.7%, UBS economists including Tao Wang wrote in a Thursday research note. They also lowered next year’s forecast to 5% from 5.2%.
UBS cited a number of factors for the downgrades, including “the weakening of property rebound, slowing momentum of consumption recovery, the falling of exports, and anemic industrial production” so far in the second quarter.
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July’s Politburo meeting will be a “key date to watch for a policy package or major policy tone change,” the economists wrote. With the People’s Bank of China starting to cut rates and some tier two cities easing property policies already, more measures may be announced before late July, they said.
Measures to boost confidence “including lowering some tax and fees, entry barriers, transaction costs, and arrears for enterprises” are being pushed by the State Council and its major departments, UBS said. Any major fiscal support “may still have to wait” until the Politburo meeting, it added.
