Exports remain a key pillar of China’s economy, but its outlook is turning bleak according to Barclays, one of the largest banks in Europe.

According to its latest report released on November 2, Barclays expected that China’s exports will drop between 2% and 5% next year, a downgrade from its previous forecast for 1% growth.

That would be a sharp slowdown because the Chinese regime says it is maintaining its export growth at a double-digit rate this year.

According to CNBC, China’s export growth was 12.5% in the first nine months of 2022.

In 2021, China’s Customs agency also reported a sharp export growth of 29.8% in U.S. dollar terms.

If Barclays is right, China will see the first drop in its exports since 2016.

In the report, Barclays analysts said that the pace of export growth is slowing this year, partly because of a decrease in global demand for Chinese goods.

They said, “China’s share of global exports has been shrinking this year.”

The analysts comments continued, “Foreign companies are seen to have shifted their orders away from China to its Asian neighbors, including Vietnam, Malaysia, Bangladesh and India, for the production of some key labor-intensive goods.”

Due to weaker global demand for China’s exports, Barclays also downgraded the outlook of the world’s second largest economy.

Barclays once again cut its forecast for China’s economic growth in 2023 to 3.8%. In September, the lender lowered China’s growth forecast on falling property investment.

In its new forecast, Barclays also expects China’s real estate investment to drop 8-10%, versus previous forecasts for a low-single-digit decline.

Barclays is not the only financial institution to lower its forecast. Some other financial institutions have also lowered their forecasts for China’s economic growth in 2023.

Goldman Sachs in September downgraded its growth forecast for China from 5.3% to 4.5% next year. Nomura also lowered its forecast from 5.1% to 4.3%.

The impact of COVID-19, weaker exports, slow recovery in property, and a softer auto market are cited as reasons for their forecasts.

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