By Kevin Yao
BEIJING (Reuters) – China’s economy is likely to grow 4.8% in 2024, below the government’s target, and growth could cool further to 4.5% in 2025, a Reuters poll showed , keeping pressure on policymakers as they consider more stimulus measures.
According to the poll, conducted September 27, gross domestic product is expected to rise 4.5% in the third quarter from a year earlier, slowing from 4.7% in the second quarter and thus reaching the weakest level since the first quarter of 2023. and October 15.
Authorities have sharply stepped up stimulus policy since late September in a bid to revive the weak economy and ensure growth reaches the government’s target of around 5% this year.
“The biggest pressure comes from the consumption side, which is linked to deflationary pressures,” said Xing Zhaopeng, ANZ’s senior China strategist.
Xing expects economic activity to improve in the fourth quarter as a series of stimulus measures kick in, but still maintains its 2024 growth forecast at 4.9%.
China, which has rarely failed to meet its growth target, last missed it in 2022, when the pandemic pushed growth down to 3%, sharply lower than the target of around 5.5%.
The government will release third-quarter GDP data and retail sales, industrial production and investment data for September at 02:00 GMT on October 18.
The latest poll showed a generally pessimistic outlook compared to the previous poll in July, when economists forecast 5.0% growth for 2024.
Of the 75 joint contributors who took part in both the July and October polls, a majority of economists, or 57%, have revised down their growth forecasts for this year and 32% have left them unchanged.
All the polls were taken after the latest monetary measures, but this has not moved GDP forecasts for the two-year Reuters poll at all, underscoring the depth of pessimism about growth prospects in a period of prolonged property crisis.
Analysts and investors expect a meeting of China’s parliament later this month to unveil a more specific stimulus plan.
According to the poll, growth in the world’s second-largest economy is expected to slow further to 4.5% in 2025, unchanged from the July poll.
Last week, China’s finance minister pledged to “significantly increase” debt levels to revive growth, but left investors in the dark about the total size of the stimulus package.
China could raise another 6 trillion yuan ($850 billion) from special government bonds over three years to help shore up a sagging economy through expanded fiscal stimulus, Caixin Global reported, citing multiple sources with knowledge of the matter. business quoted.
Reuters reported last month that China plans to issue special government bonds worth about 2 trillion yuan this year as part of new fiscal stimulus.
The central bank announced in late September the most aggressive monetary support measures since the COVID-19 pandemic, including interest rate cuts, a 1 trillion yuan liquidity injection and other steps to support real estate and stock markets.
Analysts polled by Reuters expect the central bank to cut the one-year lending rate, the benchmark lending rate, by 20 basis points in the fourth quarter and cut banks’ reserve requirements (RRR) by 25 basis points.
The PBOC is likely to cut the seven-day reverse repo rate – the key policy rate – by 20 basis points in the first quarter of 2025. The bank cut interest rates by 20 basis points on September 27.
Chinese consumer inflation unexpectedly eased in September as producer price deflation deepened, increasing pressure on Beijing to take steps to boost demand as exports lose steam.
Analysts polled by Reuters estimate that Chinese consumer prices will rise 0.5% this year, well below the government’s target of around 3%, before rising 1.4% in 2025.
(For other stories from Reuters’ suite of polls on the global long-term economic outlook:)
(Poll by Susobhan Sarkar and Anant Chandak in Bengaluru and Jing Wang in Shanghai; Reporting by Kevin Yao; Editing by Shri Navaratnam)
