(Reuters) - J.P.Morgan and Citigroup (NYSE:C) upgraded China's 2023 full-year gross domestic product growth forecast on Tuesday, citing that the country's decision to lift stringent COVID-19 restrictions last December helped boost growth.
J.P.Morgan and Citi upgraded their annual economic growth forecast for the world's second-largest economy by 40 basis points to 6.4% and 6.1% year-on-year, respectively.
China's economy grew at a faster-than-expected rate in the first quarter, official data showed on Tuesday, expanding 4.5% year-on-year, as policymakers move to bolster growth following the end of the pandemic curbs.
The Wall Street banks pointed to a rebound in travel-related consumption and services and the stabilization in the housing markets for the stronger-than-expected GDP growth.
"The post-reopening recovery should continue in the near term, and we expect the growth momentum will soften into H2 amid external sector uncertainty and as the front-loading of macro policy support turns into a drag later this year," Chief China Economist Haibin Zhu said in a note.
Citi said Chinese policymakers won't "lay back comfortably", and will have to tackle structural challenges such as youth unemployment and local government debt.
"The private sector could need additional support to restore confidence. We are yet to see concrete measures from the government for now," it added.