Morgan Stanley analysts expect that the Chinese economy will show stronger growth next year, which will be facilitated by the transition to policy easing after excessive tightening in 2021.
Morgan Stanley said that the government has already suspended the reduction of borrowed funds and has begun to ease monetary and fiscal policy. Analysts also predict an improvement in the sentiment of private companies after signals from politicians that there is still a need for economic growth.
"China's GDP growth is likely to accelerate at the beginning of next year and will amount to 5.5% for the whole of 2022," Morgan Stanley reported.
The Chinese government's recognition that economic growth is facing a number of obstacles - a reduction in demand, a supply shock and a deterioration in expectations - suggest that they will confirm the need to revive private business and market sentiment regarding the prospects for economic growth, analysts said.
However, the spread of a new strain of Omicron coronavirus increases the risks of selective shutdowns in the short term, analysts warned.