BBVA raises China growth outlook to 8% in 2013

Upward revision due to strong Q4 showing.

"After slowing by more than expected through Q3 2012, China’s economy has gained speed. Growth rose to 7.9% y/y in Q4, bringing the full-year outturn to 7.8%, thus avoiding a hard landing. We expect growth of 8.0% in 2013, a slight upward revision from our previous projections," said BBVA.

BBVA said China’s new leadership team has signalled it will maintain a supportive macro policy stance in 2013 after it takes office in March.

"Nevertheless, with inflation and financial fragilities rising, we expect overall macro policies to be set cautiously in the coming year, with no further interest rate cuts," it said.

"Modest currency appreciation is likely to continue in 2013. Growth is on track, the balance of payments is still in surplus, and capital inflows are projected to increase. We expect the authorities to accommodate a further modest rise in the RMB against the USD to around 6.10 RMB/USD by end-2013," it projected further.