Key View
- GDP growth slowed to 4.6% y-o-y in Q3 2024 from 4.7% in Q2 as the manufacturing sector struggled.
- We have revised our 2024 forecast upward slightly to 4.8% from 4.7% to account for the slightly stronger data so far, as well as what we think will be a largely steady economy in Q4.
- While Beijing has clearly ramped up monetary easing, the jury is still out on fiscal stimulus. As such, we have also tweaked our 2025 growth forecast slightly upward to 4.5% from 4.4%.
Real GDP expanded by 4.6% y-o-y in Q3 2024, slightly outperforming most economists’ estimates (BMI: 4.5%, Bloomberg Consensus: 4.5%). As a result, output for the first three quarters of the year came in at 4.8%, and just above our long-held 4.7% growth forecast. While the recent monetary and fiscal stimulus announcements are probably too late to make a big difference in Q4 2024, we do not think the economy will slow much further through year-end (see chart below).
Mainland China’s economy has witnessed a slight upward revision in its growth forecasts, reflecting a cautious optimism stemming from recent governmental measures. Initially, the anticipated growth rate appeared stagnant due to prolonged global economic uncertainties and domestic challenges. However, the latest adjustments have nudged the forecasts to a slightly higher figure, signaling resilience. Key drivers in this revision include a rebound in consumer spending and modest improvements in industrial output, supported by targeted governmental policies aimed at stabilizing the economy.
Despite this upward revision, the mixed message from local stimuli has left analysts assessing long-term implications. Beijing has employed a combination of tax cuts, infrastructure spending, and credit easing to invigorate economic activities. Yet, these measures have been accompanied by careful rhetoric, emphasizing sustainable growth over rapid expansion to avoid potential pitfalls like debt accumulation and asset bubbles. The nuanced strategy indicates the government’s intent to balance immediate economic boosts with lasting stability.
Looking forward, experts suggest monitoring both internal policy adjustments and external market trends closely. While the revised growth figures inspire cautious optimism, unpredictability in global trade dynamics and geopolitical tensions may pose challenges. Nevertheless, China’s approach underscores a deliberate shift towards fostering a robust economy entrenched in sustainable policies, as it navigates the intricate landscape of post-pandemic recovery. As such, the world watches China’s next economic chapter with keen interest, mindful of its global influence.
Read More
