Reuters reports that Bank of America slashed its outlook on China's economic growth for the second time in as many months, citing delays in major policy support from the central bank after an energy crisis.
BofA reduced its real gross domestic product (GDP) growth forecast for China for this year to 7.7% from 8.0%, and cut its 2022 GDP forecast to 4.0% from 5.3% due to deferred effects of policy easing.
The bank expects growth to stabilise by 2023 at 5.3%, down slightly from its previous forecast of 5.8%.
The downgrades come after data on Monday showed power shortages sent factory output in China back to levels last seen in early 2020 and challenges in the property sector dragged on GDP growth in the third quarter.
"While we think Chinese policymakers have entered the catch-up mode in late-September, in our view it may take quite some time for any new measures deployed to kick in," a report accompanying the downgrade said.
BofA predicted the People's Bank of China would trim its loan prime rate by end of this year, but saw a threat of macro instability in the country due to "the delay in effective policy easing" as credit expansion continued to slow.