The World Bank on Thursday raised its forecast for China’s economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would continue to weigh on next year.
The world’s second largest economy is struggling this year, mainly due to the housing crisis and tepid domestic demand. An expected increase in US tariffs on its goods when US President-elect Donald Trump takes office in January could also weigh on growth.
“Tackling challenges in the real estate sector, strengthening social safety nets and improving local government finances will be key to unlocking a sustainable recovery,” said Mara Warwick, World Bank Country Director for China.
“It is important to balance short-term growth support with long-term structural reforms,” she added in a statement.
Thanks to the effect of recent policy easing and near-term export strength, the World Bank sees China’s gross domestic product growing at 4.9% this year, up from its June forecast of 4.8%.
Beijing has set a growth target of “around 5%” this year, a goal it says it is confident it will achieve, SEEbiz reports.
Although growth is also expected to fall to 4.5% in 2025, this is still higher than the World Bank’s previous forecast of 4.1%.
Slower household income growth and a negative wealth effect due to lower house prices are expected to weigh on consumption in 2025, the Bank added.
To revive growth, Chinese authorities have agreed to issue a record 3 trillion yuan ($411 billion) in special government bonds next year, Reuters reported this week.
The figures will not be officially released until the annual meeting of China’s parliament, the National People’s Congress, in March 2025, and could still change before then.
biznis.ba
