BEIJING - Swiss bank UBS has upgraded China's gross domestic product (GDP) growth forecast in 2016, citing encouraging new economic indicators and loose credit and fiscal policy support.

"We now see 2016 real GDP slowing more modestly to 6.6 percent (vs. our previous forecasts of 6.2 percent) from 2015's 6.9 percent," the bank's China economy research team said in a research note.

The bank also raised the China GDP growth forecast for 2017 from its previous prediction of 5.8 percent to 6.3 percent.

The new forecasts came just after official data on Friday showed China's economy had expanded 6.7 percent during the first quarter, meeting market expectations. In addition, better-than-expected growth was seen in the country's retail sales, industrial output and fixed asset investment.

China has set a target of 6.5 to 7 percent GDP growth for 2016, and at least 6.5-percent annual growth through 2020.

The bank said it raised the forecast due to the recent sharp surge in property sales and improving market sentiment as well as looser-than expected credit, fiscal and quasi-fiscal policy support.

UBS followed other international financial institutions in raising the prospect for China's economy growth.

Earlier this week, the International Monetary Fund raised its forecast for China's growth in 2016 and 2017 to 6.5 percent and 6.2 percent respectively, both up 0.2 percentage points from its January predictions.