Optimism around 2023 diminishes with modest economic growth expectation
China’s decision to set a modest 5% economic growth target for 2023 may knock some optimism out of commodity markets, which had been anticipating a surge in demand from the world’s largest buyer of natural resources.
The 5% growth ambition is clearly an improvement on the tepid 3% expansion of gross domestic product achieved in 2022, but it’s also hardly likely to fuel expectations of a surge in demand for commodities.It’s worth starting by looking at what happened last year. An acceleration of economic growth to 5% implies that more commodities will be required, and probably to the extent that China’s imports will return to positive territory.
The Refinitiv estimate for the first two months of this year also is an acceleration from the official customs numbers of 90.86 million tonnes of imports in December. If the official numbers are in line with Refinitiv’s estimate, February will be the strongest month for crude oil imports since July 2020.
Overall, the current backdrop is positive for China’s commodity demand, with the end of COVID-19 restrictions boosting fuel consumption and stimulus spending encouraging increasing steel output.
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