Morgan Stanley cuts its forecast for the growth of the Chinese economy in 2023 to 4.7%

Morgan Stanley has joined a group of major banks and brokerages in lowering forecasts for China’s economic growth for this year after a series of disappointing data and concerns about the ailing real estate sector there.

According to a note issued by the bank on Wednesday, it now expects China’s gross domestic product to grow 4.7 percent this year, down from its previous forecast of 5 percent growth. It also cut its forecast for 2024 gross domestic product growth to 4.2 percent from 4.5 percent.

JPMorgan this week cut its growth forecast for China’s GDP this year to 4.8 percent from 5 percent, while Barclays cut the forecast to 4.5 percent.

Beijing has set a growth target for the country’s economy this year at around 5 percent.

Economists said in a note by Morgan Stanley that the reduction in growth forecasts was due to factors, including the prediction of a sharp slowdown in capital spending and the problems of the real estate sector, which will have consequences for consumption.

The Chinese real estate sector has been suffering from a severe shortage of liquidity since late 2021 when the Evergrande Group (HK:3333) collapsed and its collapse caused a series of debt defaults.