World Bank: China’s economic growth will slow next year despite stimulus boost | Real Time Headlines

The World Bank said that although recent stimulus measures have temporarily boosted China’s economic growth rate, China’s economic growth rate is expected to decline further in 2025.

In its economic update on Tuesday, the international lender forecast China’s economic growth will fall to 4.3% next year from 4.8% in 2024.

The 2024 figure rose 0.3% from the bank’s April forecast after Beijing launched a series of stimulus measures that boosted investor confidence and prompted Stock market reboundsand then failed.

However, while these measures focus mainly on monetary policy, the World Bank’s 2025 growth forecast is unchanged from its previous forecast.

In an interview with CNBC “Asian road signAditya Mattu, the World Bank’s chief economist for East Asia and the Pacific, said on Tuesday that the “fiscal dimension” of the stimulus remained unclear, complicating forecasts.

“The question is whether (the stimulus) can really offset consumer concerns about falling wages, falling property income and concerns about getting sick, getting older and losing their jobs,” Mattu said.

The World Bank blamed China’s weak consumer spending on a host of concerns, in addition to challenges such as a persistently weak housing market, an aging population and rising global tensions.

James Sullivan, head of Asia-Pacific equity research at JPMorgan Chase, emphasized on CNBC’s “Street Signs Asia” last week that the focus of the stimulus plan is supply and investment, not consumer spending in China.

“The multimillion-dollar question facing China right now is does (the stimulus) only flow to the supply side, or does it ultimately flow to consumer demand? That’s not what we expect right now,” he said.

At the same time, Shan Hui, chief China economist at Goldman Sachs, told CNBC that “Squawk Box AsiaChina’s economic growth rate next year will largely depend on the size of any additional stimulus and the outcome of November’s U.S. presidential election, it was revealed on Tuesday.

Goldman Sachs still predicts that China’s actual gross domestic product growth will be 4.3% in 2025.

On Tuesday, Chairman of China’s National Development and Reform Commission Commit to more action To boost the national economy, including accelerating the issuance of special purpose bonds to local governments. However, the official did not announce any new major stimulus plans.

The World Bank has long advocated that China promote economic growth through bold policy action Such as unleashing competition, upgrading infrastructure and reforming education.

But Mattu said stimulus measures cannot replace the deeper structural reforms China needs to boost long-term growth. However, he added that any boost from stimulus would be welcomed by other countries in the region, which remain highly dependent on China for their growth.

The World Bank predicts that economic growth in East Asia and the Pacific will reach 4.7% this year and rise to 4.9% next year due to an expected export recovery and improving financial conditions.

However, the report said that as China’s economy slows, the region will need to find more domestic growth drivers.

“For three decades, China’s growth has brought benefits to its neighbors, but the size of that boost is now waning,” the World Bank said in a report on Tuesday.