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Major global banks, including Bank of America and Goldman Sachs, have lowered their growth forecasts for China, now projecting less than 5% for 2024. BofA anticipates a 4.8% growth rate, citing weak domestic demand and insufficient policy support as key challenges for the Chinese economy.
BofA Lowers China’s Growth Forecast to 4.8%, Citing Insufficient Policy Support and Weak Demand
Most global banks anticipate that China's economy will grow by less than 5% this year. Bank of America Corp. is the most recent to reduce its forecast, joining Goldman Sachs Group Inc. and JPMorgan Chase & Co. on this front.
According to a report from BofA received on September 4 (via Yahoo Finance), the world's second-largest economy is expected to expand by 4.8% this year, a decrease from the previous forecast of 5%. The bank stated that growth may further decelerate to 4.5% over the next two years, as opposed to an earlier estimate of 4.7%.
The downgrade indicates a growing consensus among the world's largest institutions that China may need help achieving its current growth target of approximately 5% this year. After the economy expanded at its weakest pace in five quarters, there are cries for Beijing to introduce additional stimulus. However, policies have remained incremental, and the central bank has stated that it will refrain from implementing "dramatic"measures.
“We find both the fiscal and monetary policy stance less accommodative than desired and insufficient to revive domestic demand growth,” BofA economists, including Helen Qiao, wrote in the note dated September 2.
BofA Warns of U.S. Election Impact on China’s Growth, Cites Weak Credit Demand and Exports
The bank acknowledged that its most recent forecast is at the lower end of the official target. It emphasized that the US presidential election is a significant uncertainty for China's development, as exports are currently the economy's “almost only bright spot.”
According to official data, credit demand remained weak despite lower lending rates, while a broad measure of government expenditure decreased in the first seven months of the year.
BofA stated that sequential growth may have reached its lowest point in the second quarter as existing measures progressively took effect. However, due to insufficient policy support, China's expansion is expected to stabilize at below-potential levels for the next two years.
