Citigroup raises China growth forecast

Citigroup Inc. raised its growth forecast for China to 5 percent this year after encouraging data supported expectations that the official growth target could be met. Citigroup economists said they expected retail sales and industrial production to recover in the country, and that the contraction in exports could ease after surveys on manufacturing activity came in positive for the first time in 6 months. Citi economists led by Yu Xiangrong made the assessment that “the cyclical bottom has been reached, all eyes are on whether organic demand will recover at a time when policy momentum is increasing.” Citigroup, which was previously among the investment banks with pessimistic expectations for China, had a growth forecast of 4.7 percent for this year. “We had previously lowered our GDP forecast due to disappointment with policies,” said the economists, pointing to the steps taken in the housing sector since the end of August and stating that “policy momentum has clearly exceeded expectations.”