The April growth data from China was shockingly slow - industrial output contracted by 5.7 percent versus March, while retail sales contracted by 0.1 percent from the month ago levels. Real estate was a big drag but not the only one. This has led some brokerages like JPMorgan to cut China’s gross domestic product (GDP) growth for the second quarter and for the whole year.

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While sharing his perspective, Jahangir Aziz, Head of Emerging Markets Economics Research and Commodities at JPMorgan, highlighted the historical pattern of exuberance and disappointment associated with China's economic trajectory. He expects China to face some challenges in its recovery journey, suggesting that any revival will likely encounter hiccups along the way. Despite these potential obstacles, Aziz projected a 7 percent growth rate for China in the first half of the year, followed by 5 percent in the second half. These estimations indicate a consistent performance for China's economy, with an average growth rate of 6 percent.

“We do expect China to deliver about 7 percent average growth rate in the first half of the year, 5 percent in the second half of the year – so 6 percent on an average,” he said.

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Aziz's optimism regarding China's economic growth has broader implications for the global economy. China's role as a driver of global growth has been a crucial factor in shaping the dynamics of international trade and investment. If China manages to achieve the projected growth rates, it is likely to contribute significantly to the overall expansion of the global economy.

Shifting the focus from China to the United States, Aziz predicts a mild recession by the fourth quarter of the year. This forecast suggests that the US economy might experience a temporary contraction. However, Aziz believes that if the issue of the debt ceiling is resolved, market expectations could shift towards a potential interest rate hike in June.

“If the debt ceiling is truly out of the way then I think the market is likely going to think that the June rate hike is not completely out of the question. Our baseline is that they will pause and they will pause for a prolonged period of time. The real gap between our view and that of the market is that we don’t see any rate cuts in 2023,” he said.

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Fook Hien Yap, Senior Investment Strategist at Standard Chartered Bank, weighed in on China's position as a driver of global growth. While acknowledging its significance, Yap downgraded China's rating to ‘neutral’ in terms of investment outlook. This suggests a cautious stance regarding China's economic prospects. Yap also labeled India as ‘neutral’ in terms of investment outlook, indicating a similar cautious approach towards the Indian market.

“We have downgraded China to be neutral within Asia ex-Japan, India is neutral as well within Asia ex-Japan but to be clear we prefer Asia relative to others globally, so it is still the area that we like,” he said.

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Furthermore, Yap expressed a neutral view on Asia ex-Japan, implying a wait-and-see attitude for the broader Asian market.

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(Edited by : C H Unnikrishnan)