China’s economy faces lopsided supply and demand problems that have been decades in the making.
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Forecasters polled by Bloomberg have slashed their growth outlook for China.
The country is battling deflation, soaring youth unemployment, and a property-market crisis.
Policymakers cut stamp duty taxes Monday – but are yet to roll out a “big bang” economic fix.
China’s economic nightmare is unlikely to end anytime soon, according to forecasters, who’ve cut their growth expectations for both this year and next.
Economists polled by Bloomberg now see the Asian country’s gross domestic product (GDP) rising just 5.1% in 2023, according to the median estimate in the publication’s latest survey – down from an earlier prediction of 5.2%.
They’re also expecting GDP to rise just 4.5% in 2024, a decline from 4.8% previously.
China’s economy expanded 6.3% over the second quarter of 2023, falling well short of forecasters’ expectations, while the country is also battling 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 have warned that China’s growth slowdown could have severe consequences for the rest of the world.
“Unlike during the Great Financial Crisis, China will not drive the global economic recovery in the aftermath of the COVID-19 pandemic,” Alfredo Montufar-Helu, the head of the China Center at the Conference Board, told Insider earlier this month.
“As its economy continues facing downward pressures, its growth momentum might slow down further, in turn exacerbating the already significant pressures that the global economy is facing.”
Beijing lowered its official GDP target for 2023 to just 5% in March and has responded to signs of stuttering growth by cutting stamp duty taxes, loosening housing market restrictions, and slashing several key interest rates.
But policymakers’ reluctance to roll out a so-called “big bang” economic fix has weighed on stock prices and dragged the Chinese yuan close to an all-time low against the dollar, with further depreciation expected.
In a separate Bloomberg poll, 32% of surveyed investors said they believe the Chinese government’s intervention will prove to be “too little and too late” – while just 11% said they were expecting a “really big” response, as happened after the 2008 financial crisis.