Meishan, China – January 15: A textile worker works in the workshop of Sichuan Renshou Jin’e Textile Co., Ltd. On January 15, 2024 in Meishan, Sichuan Province, China. (Photo by Pan Jianyong/VCG via Getty Images)
VCG | China Optical Group | Getty Images
BEIJING – Major international investment banks expect China’s economy to grow at a slower pace in 2024 than in 2023, according to annual forecasts issued in the past few months.
The average forecast among five firms, including Goldman Sachs and Morgan Stanley, pointed to a 4.6% increase in real GDP this year, down from the 5.2% expected for 2023.
China is due to publish its 2023 GDP figures on Wednesday, and previously announced an official target of around 5% for this year. Speaking at the World Economic Forum in Davos on Tuesday, Premier Li Qiang said that the Chinese economy grew by about 5.2% last year.
Beijing is scheduled to unveil this year’s target at an annual parliamentary meeting in early March.
China’s GDP forecast
| firm | 2024 | 2023 |
| Goldman Sachs | 4.8 | 5.3 |
| UPS | 4.4 | 5.2 |
| City | 4.6 | 5.3 |
| JP Morgan | 4.9 | 5.2 |
| Morgan Stanley | 4.2 | 5.1 |
| middle | 4.6 | 5.2 |
Among the five banks’ forecasts reviewed by CNBC, JP Morgan had the highest rate at 4.9%, while Morgan Stanley had the lowest rate at 4.2%.
“One important task in 2024 is to manage downside risks in the economy, especially from the housing market correction and spillover risks,” Haibin Zhu, JPMorgan’s chief China economist and head of Greater China Economic Research and a team, said in a report earlier this year. . Month.
“The deflationary pressure is likely to fade in 2024, with the shift in global commodity prices and domestic pork prices, but low inflation will remain along with insufficient domestic demand,” analysts said, noting that new technology and other sectors grew rapidly, but It is not enough to offset housing and other factors that affect growth.
The world’s second-largest economy has slowed from double-digit growth in recent decades, hurt during the pandemic by COVID-19 restrictions and, more recently, a decline in the real estate market.
Despite significant growth in sectors such as tourism and electric cars, the Chinese economy last year did not recover from the pandemic as quickly as many banks initially expected.
“The Chinese economy did not follow the scenario in 2023,” Goldman Sachs analysts said in their 2024 forecast in November.
They stressed that Beijing took the rare decision to increase the official fiscal deficit in October.
“Overall, we expect macro policy to be eased significantly (in 2024), especially by the central government, in order to support the economy and prevent real GDP growth from slowing significantly from 2023 to 2024.”
The IMF in November also cited Chinese policy announcements as a reason for its decision to raise its 2023 growth forecast to 5.4%, from 5% previously.
However, the IMF said it still expects China’s growth in 2024 to slow to 4.6% “amid continued weakness in the real estate market and weak external demand.”
It is still unclear to what extent China wants to stimulate its economy.
Premier Li said Tuesday in Davos that the country “did not resort to massive stimulus. We did not seek short-term growth while accumulating long-term risks.”
In the longer term, analysts generally expect the Chinese economy to slow further from a rising base.
UBS expects annual GDP growth to slow to around 3.5% in the years following 2025 due in part to a downturn in the housing market, which they expect will also restrict the amount of stimulus China can deploy.
According to UBS analysts, there is still growth potential in China, specifically in the increased movement of workers from rural to urban areas, as well as investment in manufacturing, services and renewable energy.
Even at the level of 3% to 4%, the pace of growth in China remains faster than its counterparts in advanced economies.
The International Monetary Fund forecast in October that US real GDP growth would slow to 1.5% in 2024, down from 2.1% in 2023. The Fund is scheduled to issue an update to its global forecasts on January 30.