UBS Raised China’s 2009 Growth Target to between 7-7.5%

Monday, April 20, 2009 10:42
Posted in category The Big Picture

following last week’s news that China had accomplished a miraculous 6.1% growth in the first quarter of the year, UBS released their updated projection for 2009 on Thursday.

With the previous change to 6.5% being brought about by a weaker than thought 2008 q4, Wang Tao and her team now see this 6.1% as a sign of a solid foundation going forward:

While the external outlook remains bleak, there have been signs of domestic activity picking up in China, as a result of the government’s policy stimulus. Q1 2009 growth rebounded on a quarter-on-quarter basis. Most importantly, we expect that the explosive growth of bank lending since late 2008 will lead to a surge in government-mandated investment in the coming months.

Supported by a an interesting table below where we can see that the recent upgrade comes largely from a 10% increase in expected consumption, and a more than 25% increase in the fixed investment.

It is a forecast that is hedged by a few issues that they see going forward, issues that could bring further adjustments:
1) Further falloff in exports
2) Further falloff in real estate

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