"Not a Recession..." Institutions Move to Raise China's Growth Rate Forecast

International credit rating agency Moody's has revised upward its forecast for China's economic growth rate this year. This is attributed to the effectiveness of the growth strategy centered on manufacturing and exports.

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On the 3rd, Moody's stated that China's first-quarter economic growth was driven by trade and manufacturing activities, supported by fiscal policies, and raised China's economic growth rate to 4.5% (previously 4.0%).

Moody's increase of 0.5 percentage points in its forecast for China's economic growth rate this year after about half a year is interpreted as reflecting the rise in China's first-quarter economic growth rate and the proactive stimulus measures by Chinese authorities.

Moody's has been regarded as the most pessimistic among international credit rating agencies in evaluating the Chinese economy recently. In December last year, it downgraded China's national credit rating outlook from 'stable' to 'negative,' analyzing that China's annual gross domestic product (GDP) growth rate for 2024 and 2025 would be 4.0%.

This drew attention as it contrasted with Standard & Poor's (S&P) and Fitch maintaining a 'stable' outlook for China's national credit rating during the same period.

The International Monetary Fund (IMF) also raised its 2024 forecast for China's economic growth rate from 4.6% to 5% in a report released on the 29th of last month, citing these factors. The IMF also revised its growth forecast for next year upward by 0.4 percentage points to 4.5%.

There are also views that China can achieve its economic growth target of 5% set for this year. This is because it is accelerating economic stimulus by continuously introducing measures to boost domestic demand and activate investment.

China's financial information provider Caixin announced that the Caixin Manufacturing Purchasing Managers' Index (PMI) for May was recorded at 51.7, the highest since July 2022.

This is 0.3 higher than the previous month and also exceeded the market forecast (51.5). The PMI statistic is an indicator showing economic trends. A value above 50 indicates economic expansion, while below 50 indicates economic contraction.

This content was produced with the assistance of AI translation services.