JP Morgan and Nomura on Wednesday lifted their forecast for China's economic growth for the year, after the economy grew at a faster-than-expected pace in the third quarter from a year earlier.

JP Morgan now expects China's gross domestic product (GDP) to grow 5.2% in 2023, up from their previous forecast and Beijing's official target of a 5% growth.

Nomura raised their forecast to 5.1% from 4.8%.

Data on Wednesday showed China's GDP grew 4.9% in July-September from the year earlier, higher than a Reuters poll expectation for a 4.4% increase. It was, however, slower than the 6.3% expansion in the second quarter.

"Like August, September monthly activity came in stronger than expected. This is encouraging," said JPM economists led by Haibin Zhu, adding that China's economic recovery momentum is expected to continue in the coming months.

"Policy tailwind sectors remain strong; export volume has returned to positive growth... the recovery in retail sales is particularly encouraging," JPM said.

Zhu warned, however, of weak links in the economy, such as private investment and a housing market correction.

"Weak nominal GDP growth suggests that the earnings and profit outlook remains a hurdle in the path to the recovery in private investment," he noted.

JPM sees China's potential growth coming down faster than initially expected in 2024 and 2025 to a range of 4%-4.5% and 3.5%-4%, respectively.

(Reporting by Albee Zhang and Susan Mathew; Editing by Christian Schmollinger and Eileen Soreng)