Beijing: Goldman Sachs Group Inc raised its outlook for China’s economic growth this year as factory activity accelerates more than expected.

China’s economy likely expanded at a 7.5% annualised pace in the first quarter from the prior three months, higher than their 5.6% prior estimate, Goldman economists led by Hui Shan said in a note. The bank now sees 2024 growth forecast at 5%, in line with Chinese policymakers’ target, versus 4.8% previously. It kept the 2025 projection at 4.2%.

The world’s second-largest economy has struggled to regain momentum as the property sector and consumer spending remain weak, though data so far this year have shown green shoots in factory activity and trade. Data next week is set to show the economy expanded at a 5% year-on-year pace in the first quarter from 5.2% at the end of last year, according to forecasts.

Goldman’s revision comes after a key gauge of factory activity - the Caixin manufacturing purchasing managers index - indicated a fifth straight month of expansion in March, with official government data also showing a rebound. Exports have also increased amid rising global demand for technology goods.

 - Bloomberg