ICYMI - Nomura has lopped its 2023 China GDP forecast to 5.5% from 5.9% - "losing steam"

Data from China is less encouraging that expected. Data from earlier in the week:

• ForexLive Asia-Pacific FX news wrap: China economic activity data miss expectations

And responses:

• Fund manager survey: more than half have "a structural de-rating view for China equities"
• MUFG on the weaker data from China weighing on AUD

Now analysts at Nomura have cut their forecast for China's 2023 gross domestic product (GDP) growth to 5.5% from 5.9% previously.

• lowered its forecast for Q2 GDP growth to 7.8%y/y from its previous projection at 8.4%

This is against a background of the Chinese Communist Party government aiming for 2023 growth of around 5%.

As for policy implications, Nomura expects the People's Bank of China to cut its benchmark lending rate, the loan prime rate (LPR), by 10 basis points in mid-June.

• "As China's economy moves out of the post-COVID sweet spot, Beijing may have to introduce other supportive measures, including adding transfers to local governments and SOEs (state-owned enterprises) via its policy banks"

Note that earlier this week we had the MLF setting from China:

• PBOC 1 year MLF at an unchanged rate of 2.75%

The LPR rate setting for this month is due on the 22nd. Given the MLF rate was unchanged expectations are low for any change to LPRs in May. Not zero though.