China 2024 GDP forecasts by JPMorgan, Goldman, Citi, Morgan Stanley

MEISHAN, CHINA – JANUARY 15: A textile worker works at the workshop of Sichuan Renshou Jin’e Textile Co., Ltd. on January 15, 2024 in Meishan, Sichuan Province of China. (Photo by Pan Jianyong/VCG via Getty Images)

Vcg | Visual China 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 released in the last few months.

The average prediction among five firms, including Goldman Sachs and Morgan Stanley, pointed to a 4.6% increase in real GDP this year, down from 5.2% expected for 2023.

China was due Wednesday to release GDP figures for 2023, and previously announced an official target of around 5% growth for the year. Speaking at the World Economic Forum in Davos on Tuesday, Premier Li Qiang said the Chinese economy grew by around 5.2% last year.

Beijing is set to reveal this year’s target at an annual parliamentary meeting in early March.

China GDP forecasts

Firm 2024 2023
Goldman Sachs 4.8 5.3
UBS 4.4 5.2
Citi 4.6 5.3
JPMorgan 4.9 5.2
Morgan Stanley 4.2 5.1
Average 4.6 5.2

Among the five bank forecasts CNBC looked at, JPMorgan had the highest at 4.9%, while Morgan Stanley had the lowest at 4.2%.

“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, noting that new tech and other sectors have grown rapidly, but not enough to offset housing and other drags on growth.

The world’s second-largest economy has slowed from the double-digit growth of past decades, weighed down during the pandemic by Covid-19 restrictions and, more recently, a slump in the real estate market.

Despite significant growth in sectors such as tourism and electric cars, China’s economy last year did not rebound from the pandemic as quickly as many banks had initially expected.

“The Chinese economy did not follow the script in 2023,” Goldman Sachs analysts said in their 2024 outlook in November.

They highlighted that in October, Beijing made the rare decision to increase the official fiscal deficit.

“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.”

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The International Monetary Fund in November also cited China’s policy announcements as a reason for its decision to raise the 2023 growth forecast to 5.4%, from 5% previously.

However, the IMF said it still expected China’s growth to slow in 2024 to 4.6% “amid continuing weakness in the property market and subdued external demand.”

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It remains unclear to what extent China is willing 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 long term, analysts generally expect China’s economy to slow further from a high base.

UBS expects annual GDP growth to slow to around 3.5% in the years following 2025 due partly to the housing slump, which they also expect to restrict how much China can deploy stimulus.

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According to UBS analysts, there’s still growth potential China, specifically in further movement of workers from rural to urban areas, as well as investment in manufacturing, services and renewable energy.

Even at 3% to 4%, the pace of China’s growth remains faster than that of developed economies.

The IMF in October forecast U.S. real GDP would slow to 1.5% growth in 2024, down from 2.1% in 2023. The fund is set to release an update to its global predictions on Jan. 30.

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