BOC Research Institute released the 2023 Economic and Financial Outlook (the “Report”) in Beijing on November 30, 2022. The Report reviews the global and China’s economic and financial performance as well as the global banking performance in 2022. It also provides an outlook on the economic and financial situations and the global banking trends in 2023.
In terms of the global economic and financial situations, the Report notes that the world economy faced a mounting risk of “stagflation” through 2022 due to the Russia-Ukraine conflicts, energy shortage and monetary tightening of developed economies. The US Dollar Index and US Treasury yields soared with the reshoring of capital to the United States, continuous tightening of offshore dollar liquidity and volatile financial markets. Looking forward to 2023, the world economy will shift from “stagflation” to recession. Developed economies such as the EU and the US will likely sink into a recession in 2023H1 while emerging economies in the Asia Pacific will see stressed export growth. The hot inflation will cool down across the world. The US Federal Reserve is expected to slow its interest rate hikes, which will lead to a slower pace and a smaller scale of capital reshoring to the United States. The Report also provides special analysis on some hot issues, including new progress in global technological innovation, reshaping of the global industry landscape amid an energy crisis, the role and prospects of RMB in global foreign exchange trading and the US balance of payments characteristics.
In terms of China’s economic and financial situation, the Report notes that the Chinese government efficiently coordinated COVID-19 containment with economic and social development amid shocks inflicted by unexpected factors, including the Ukraine crisis, recurrent and sporadic coronavirus outbreaks and housing market decline. Thanks to strengthening policy efforts to stabilize the economy, China’s economy bottomed out to stage a V-shaped pattern in the year. GDP growth hit 3% for the first three quarters accumulatively, projected to be about 3.8% for Q4 alone and approximately 3.2% for the year. Looking forward to 2023, China’ growth drivers will be shifting from foreign demand to domestic demand in an improving environment at home and abroad, with macro-economic indicators recovering from the prior year. Taking into account uncertainties in various factors, the annual GDP growth for 2023 is projected to be around 3.6%, 5.3% and 6.6% under the pessimistic, baseline and optimistic scenarios, respectively. The year 2023 will be the first year of implementing strategic plans laid down by the 20th CPC National Congress. It is critical to ensure the continuity and stability of policies. Macro policies should endeavor to “stabilize growth, promote recovery, prevent risk and ensure safety”, improve the confidence and expectations of market entities and keep restoring and boosting the internal drives of economic growth. In terms of global banking developments, the Report notes that the global banking sector will see uncertainties hovering through 2023, with weaker profitability that curbs the capital adequacy enhancement and expansion of assets and non-performing loans still under pressure. Under the guidance of the 20th CPC National Congress, China’s banking sector will further anchor the recovery of the real economy, keep its profits growing steadily and continue to improve the quality of assets. The 20th CPC National Congress envisages the future development of China’s economy and finance. The banking sector will enter a new stage of high-quality development and see its business environment improving persistently, the credit supplied more precisely and directly, the retail business further transformed, the inclusive finance and green finance advancing steadily, the diversification and internationalization going deeper and the financial service ecosystem upgraded on all fronts through digitalization.