According to Bank of America (BofA), China’s economic growth is facing significant challenges in the near future, prompting the bank to lower its growth forecast for the world’s second-largest economy. The main reason for this downgrade is Beijing’s lack of bold steps toward more aggressive monetary policies.
The bank revised its real GDP growth forecast for China in 2024 down to 4.8%, compared to the previous estimate of 5.0%. It also reduced growth expectations for 2025 and 2026 to 4.5%, down from 4.7%.
The analysis shows that China’s efforts to stimulate the economy are encountering several obstacles, including insufficient stimulus measures. Additionally, the continued decline in consumer confidence is directly affecting spending. Investment is also slowing, with the property sector posing a major challenge, despite some support from the manufacturing and infrastructure sectors.
The report indicates that China’s economy experienced a marked slowdown in the second and third quarters of 2024, following strong growth in the first quarter. This deceleration points to a weakness in growth drivers, raising concerns about China’s ability to sustain its growth momentum.
Despite these negative indicators, exports remain a bright spot in the Chinese economy, supported by strong external demand and a recovery in the global technology cycle. However, BofA analysts cautioned that external factors, such as a potential slowdown in export growth or increasing trade tensions, could be the only triggers that lead Beijing to implement additional stimulus measures.
Overall, the outlook for the Chinese economy remains challenging, with the potential for new policy actions depending on global market developments and the performance of key economic sectors.
