Investing.com – China’s economy has stabilized in recent months as Beijing continued to ramp up the pace of stimulus and policy measures, although analysts at Morgan Stanley said the government is unlikely to dramatically increase stimulus in the near future.
Solid April figures showed that the recovery in business activity continued into the second quarter, with much of that resilience coming from export demand.
MS analysts said the country is on track to achieve the brokerage’s second-quarter real gross domestic product estimate of 5.5%.
But the big dip in April coupled with sluggish growth in China showed that China’s economic recovery remains largely unbalanced.
MS expects Beijing to step up “gradual efforts” to increase fiscal spending, limit excess capacity in emerging sectors and support the property market.
But broader nationwide measures to support the economy, especially the housing market, remain unlikely in the short term, with additional support from local governments appearing more likely, MS analysts said.
“We believe housing and fiscal policy are gradually turning positive, but do not expect a bazooka in the near term,” MS analysts wrote in a recent note.
Chinese stock markets have rebounded sharply over the past two months amid growing optimism about stimulus measures and the country’s economic recovery. On Monday, both the benchmark and indices were trading at 2024 highs.
However, that growth has slowed in recent sessions as data continues to point to an uneven recovery in China and sluggish domestic consumption remains a concern.
remove ads
.
Despite the recent growth, MS still expects the economy to grow less than the government forecast, with nominal GDP expected to be 4.5% in 2024, below the government’s forecast of 5%.