S&P Expects China's 2024 Growth At 4.6%, Versus 5.2% In 2023

China's gross domestic product (GDP) growth is poised to slow to 4.6 per cent in 2024 from 5.2 per cent in 2023, said S&P Global Ratings, backing its argument that its forecast takes into account the continued strain from property weakness and modest macroeconomic policy support.

According to the global rating agency, the key risks in the Chinese economy are weakness in its property market and consumption, which it argues could lead to lower growth.

"They would lead to lower overall growth. Moreover, policymakers tend to respond to strains on growth by stimulating investment, including in manufacturing. This then further increases overcapacity in several goods markets and squeezes prices and margins," it noted in a report.

China met its growth target in 2023, but economic momentum was subdued at the end of the year. The country reported 5.2 per cent year-on-year real GDP growth in the fourth quarter and for the year as a whole.

"Yet, amid continued property strains and subdued confidence, consumption momentum was weak, and prices were under strain. Nominal GDP growth was only 4.2 per cent in the fourth quarter of 2023."

Real estate, which has seen a downturn with many major developers not in good shape, weighs on the economy into early 2024.

"Housing sales started and investment continued to fall in the first two months of the year. This weakness affects the broader economy via backward and forward linkages, as well as confidence and wealth effects (from falling housing prices)," the rating agency argued.

Further, China's 5 per cent growth target for 2024, which its National People's Congress announced at its meetings in early March, is ambitious, S&P Global Ratings said.

The target is harder to reach organically than a similar target in 2023 because the favourable impact on growth from the post-pandemic re-opening is largely over, it added.

"That is true even as the drag on growth from the real estate downturn should be smaller this year."

For Asian emerging market (EM) economies, S&P Global Ratings projected robust growth, with India, Indonesia, the Philippines, and Vietnam in the lead. (ANI)