Interview: China's economic growth, equities return to improve in 2023, says Swiss bank strategist

LONDON, Dec. 14 (Xinhua) -- China's economy is to expand in 2023 with inflationary pressures set to remain benign and Chinese equities expected to yield higher return, Swiss private bank Pictet said.

"We believe that the Chinese economy will improve in 2023. We think that a growth of 5 percent is possible and achievable thanks to the reopening of the economy," Luca Paolini, chief strategist at Pictet Asset Management, told Xinhua at the bank's London office.

"I believe there will be a lot of pent-up demand that will drive consumption higher, and this will be a big boost not only for the Chinese economy but also for the global economy overall," he said.

Paolini said he believes that 2023 is going to be "still a difficult year, slightly better than 2022."

He predicted that inflation will come down a bit, but there will be "economic stagnation" in developed economies and "that means very low return on equities but some good news for bonds."

Following her visit to China last week, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said that global growth is expected to slow to 3.2 percent this year and to 2.7 percent in 2023.

"China continues to be the second-largest economy in the world, and it will grow next year faster than the U.S., faster than Europe. Clearly, it's going to be another engine for the global economy," Paolini said.

HIGHER EQUITIES

In recent weeks, the Chinese government has rolled out a string of modified measures in line with the evolving COVID-19 pandemic situation, ranging from proposing home quarantine for mild and asymptomatic cases to reducing nucleic acid tests to make it easier for people to travel and enter public venues.

Global shares and equities in the Asia-Pacific have risen broadly following China's decision to relax some of the COVID-19 rules.

Paolini said he was bullish on the performance of Chinese stocks heading into the new year: "We think that global equities will return roughly 5 to 10 percent next year, and we expect Chinese equities to do a little bit better than this."

BENIGN INFLATION

China's consumer price index (CPI), a main gauge of inflation, rose 1.6 percent year-on-year in November, the National Bureau of Statistics (NBS) said Friday.

On a monthly basis, the CPI edged down 0.2 percent, affected by domestic COVID-19 outbreaks and seasonality.

Paolini said that the overall inflationary pressure in China would remain benign.

"We expect inflation to pick up a little bit but to be still under control and it won't prevent the consumer to spend a little bit more," he said.

However, he said that some headwinds for the Chinese economy going into the new year would come mainly from the real estate sector.

"It's not going to be a plain sailing because we know the reopening like it was the case in Europe and the U.S. always brings risks," Paolini noted.

"We think that the reopening of the economy will be enough to offset the weakness in the property market," he said.