(Reuters) -BofA Global Research and other banks raised their forecast for China's 2023 gross domestic product (GDP) growth this week, after first-quarter economic growth data came in stronger than expected.
BofA now expects China's economy to grow 6.3% this year from 5.5% earlier, after climbing 4.5% in the first-quarter as policymakers moved to bolster growth following the end of strict COVID-19 curbs in December.
BofA said it expects private consumption, which drove the first quarter beat, to further expand into investment over the next two quarters.
"In our view, we are seeing the beginning of a new credit cycle, which will fuel investment growth more than consumption and lift cyclical momentum in China," BofA economists said in a note on Friday.
BofA added that commercial banks have pointed to higher and more stable new corporate loan prices due to better demand in March.
Earlier this week, J.P.Morgan, Citigroup (NYSE:C) and UBS also raised their full year GDP growth forecast for China to 6.4%, 6.1% and 5.7% respectively, following the strong data.
Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) maintained their growth forecasts at 5.7% and 6.0% respectively, with the former flagging the possibility of an upside to its view.
The upgrades come as recession drumbeats in the United States get louder. Most big global banks expect the U.S. economy to tip into recession in the back half of the year.