- Forecasters polled by Bloomberg have downgraded their growth outlook for China.
- The country is grappling with deflation, rising youth unemployment and a property-market crisis.
- Policymakers cut stamp duty taxes on Monday – but the “massive” economic reform has yet to be implemented.
China’s economic nightmare is unlikely to end anytime soon, according to forecasters, who have cut their growth expectations for both this year and next.
Economists polled by Bloomberg believe the Asian country’s gross domestic product (GDP) will grow only 5.1% in 2023 – down from a previous prediction of 5.2%, according to the median estimate in the publication’s latest survey.
They are also expecting GDP to grow only 4.5% in 2024, down from 4.8% previously.
China’s economy grew 6.3% in the second quarter of 2023, well below forecasters’ expectations, while the country also grapples with deflation, record youth unemployment and a severe real estate crisis.
US President Joe Biden called the world’s second-largest economy a “ticking time bomb” in a recent speech, while others warned that China’s growth slowdown could have dire consequences for the rest of the world.
“Unlike the great financial crisis, China will not outpace the global economic recovery following the COVID-19 pandemic,” Alfredo Montufar-Helu, head of the China Center at The Conference Board, told Insider earlier this month.
“As its economy continues to face downward pressure, its growth momentum could slow further, resulting in significant pressures on the global economy already.”
Beijing slashed its official GDP target for 2023 to just 5% in March and has responded to signs of faltering growth by cutting stamp duty taxes, loosening housing market restrictions and cutting several key interest rates.
But policymakers’ reluctance to implement so-called “big bang” economic reform has weighed on stock prices and dragged the Chinese yuan closer to all-time lows against the dollar, fueling hopes of further depreciation.
In a separate Bloomberg poll, 32% of investors surveyed said they believed Chinese government intervention would prove “too little and too late” – while only 11% said they were “really big”. Were expecting a response, as it happened after 2008. Financial Crisis.