UBS on Tuesday raised China’s GDP growth forecast for 2021 to 9.0%, higher than the previous forecast of 8.2%, citing stronger-than-expected domestic economic activity and a stronger global recovery from the COVID-19 pandemic.
The investment bank said in a report that the $ 1.9 trillion stimulus package signed by the Biden administration should lead to a stronger US and global recovery, which in turn would boost demand for Chinese exports. .
China’s exports in January and February climbed 60.6 percent to $ 468.9 billion, and imports rose 22.2 percent to $ 365.6 billion, according to data from the country’s customs authorities.
In major economies, shipments from China to the United States and the EU increased over the period, increasing by 87% and 63% respectively due to economic rebounds in these markets.
UBS expects China’s exports to grow 16% in 2021 in US dollar terms, resulting from stronger US and global growth, while the country’s imports are expected to grow 17% year on year. These two figures are higher than previous projections.
Domestic economic activity also rebounded sharply in January-February from the low base at the start of 2020. UBS expects China’s first quarter growth most likely to exceed 19%, on top of base low from last year.
During the first two months, the Chinese manufacturing purchasing managers index remained above the 50 point mark, indicating an expansion in factory activity. The country’s ex-factory prices rose for a second month in February, supported by rising global commodity prices and rising domestic demand.
“Longer effective working days have contributed to increased industrial production,” Wang Tao, UBS chief economist for China, and others wrote in the report.
“We are seeing domestic consumption rebound by 10% in real terms, which, combined with stronger exports, should help support business investment (capital spending), even as investment in infrastructure and real estate slows down. “, says the report.
China has set its GDP growth rate at over 6% for 2021 as its economic recovery gathers pace. UBS has warned that the greatest uncertainty comes from global control of the pandemic. New variants of COVID or slower progress in immunization could slow the pace of the global recovery, the bank warned.