Daily Management Review

2024 Chinese Economic Growth Is Predicted To Decline, What Is The What Wall Street Projecting


2024 Chinese Economic Growth Is Predicted To Decline, What Is The What Wall Street Projecting
Recent annual projections from major international investment banks indicate that China's economy would grow more slowly in 2024 than it did in 2023.
Five corporations, including Goldman Sachs and Morgan Stanley, averaged their predictions, which indicated that real GDP will grow by 4.6% this year instead of the 5.2% predicted for 2023.
China had previously declared an official aim of about 5% growth for the year, and it was scheduled to unveil GDP numbers for 2023 on Wednesday. Premier Li Qiang stated that the Chinese economy expanded by about 5.2% in 2018 during his speech at the World Economic Forum in Davos on Tuesday.
Early in March, Beijing will announce this year's goal at an annual parliamentary gathering.
Morgan Stanley had the lowest projection (4.2%) and JPMorgan the highest (4.9%) of the five bank forecasts.
“An important task in 2024 is to manage the downside risk in the economy, particularly from the housing market correction and its spillover risks,” JPMorgan’s Chief China Economist and Head of Greater China Economic Research Haibin Zhu and a team said in a report earlier this month.
“Deflation pressure will likely fade in 2024, with the turnaround in global commodity prices and domestic pork prices, but low inflation will stay along with insufficient domestic demand,“ the analysts said, pointing out that while growth in other industries and new technology has accelerated, it has not kept up with growth hindrances like housing.
The second-largest economy in the world has slowed from double-digit growth in previous decades due to Covid-19 limitations during the pandemic and, more recently, a decline in the real estate market.
In spite of notable advancements in industries like travel and electric vehicles, China's economy did not recover from the pandemic last year as rapidly as many banks had predicted.
“The Chinese economy did not follow the script in 2023,” Goldman Sachs analysts said in their 2024 outlook in November.
They emphasised Beijing's unusual move to raise the official fiscal deficit in October.
“Overall, we expect macro policy to ease notably [in 2024], particularly by the central government, in order to support the economy and to prevent real GDP growth from decelerating too much from 2023 to 2024.”
In November, the International Monetary Fund increased its growth prediction for 2023 from 5% to 5.4%, citing China's policy pronouncements as justification.
The IMF stated that despite this, it continued to predict that China's GDP would drop to 4.6% in 2024 "due to persistent weakness in the real estate market and muted external demand."
How much China is willing to boost its economy is still unknown.
In Davos on Tuesday, Premier Li stated that the nation "did not resort to massive stimulus." We didn't aim for rapid expansion at the expense of long-term hazards.
Analysts typically predict that China's economy would eventually slow down even more from its current high foundation.
According to UBS, the housing downturn will contribute to the slowdown in GDP growth in the years after 2025 and will limit China's ability to use stimulus.
China still has room to grow, say UBS analysts, particularly if more people move from rural to urban regions and if more money is invested in manufacturing, services, and renewable energy.
China's growth is still outpacing that of industrialised economies, even at 3% to 4%.
In October, the IMF predicted that real GDP growth in the United States will decrease to 1.5% in 2024 from 2.1% in 2023. On January 30, the fund is scheduled to give an update to its worldwide projections.