UBS raises China 2018 GDP growth forecast

BEIJING - Swiss bank UBS has upgraded its forecast on China's 2018 gross domestic product (GDP) growth, citing stronger momentum of the global economy and growth in China's exports.

The bank revised up its China GDP growth outlook to 6.6 percent for 2018 and to 6.4 percent for 2019 from their previous 6.4 and 6.3 percent, respectively, said a UBS research note Thursday.

"We now see China's exports growing faster than previously anticipated," said UBS economist Wang Tao in the note.

In 2017, China's exports increased 10.8 percent to reach 15.33 trillion yuan ($2.44 trillion), while foreign trade volume rose 14.2 percent year-on-year to 27.79 trillion yuan, data from the General Administration of Customs showed.

Wang expects investments in infrastructure and property sectors to moderate in 2018, as the government has tightened controls over local debt and credit, adding to weaker sales in the property market.

She said that consumption growth should remain resilient in 2018, citing solid income growth supported by robust performance in exports and the service sector.

Noting a likely rise in trade frictions between China and the United States, Wang said the UBS does not expect a large-scale trade war.

"In fact, we think that a stronger global recovery... should help drive this year's Chinese export growth beyond our earlier forecast, more than offsetting any negative impact from trade frictions," it said.

The overall impact on China's total exports or GDP growth will be "very small," and the Chinese currency, the renminbi or the yuan, will not be used as a tool to respond to US trade measures, the report added.

UBS followed the International Monetary Fund in raising the outlook for China's economy growth, which raised its forecast for China's 2018 GDP growth to 6.6 percent in January, up from the 6.5 percent prediction made in October 2017.