China
Robust investment and manufacturing activities in China so far this year improved the country’s economic outlook for 2024.
The real GDP growth projection was revised upward 0.2 percentage points to 4.7% for 2024 but sits below the 5.2% rate in 2023. An ongoing real estate crisis and low consumer spending continue to weaken performance expectations.
Inflation remains muted at 0.8% in 2024—a 0.7 percentage-point drop from Q1 estimates. Weak domestic demand will keep the rate on the lower side this year. An increase in fiscal stimulus could help boost consumption and reduce the risk of deflation.
Prolonged distress in the real estate market and broader spillover to other sectors like banking are the biggest threats to the outlook for China. These challenges could cause a wave of defaults, capital flight and currency depreciation. A sharper slowdown in spending and investment would slash corporate revenues and weaken the labour market.
These headwinds and overall uncertainties in the outlook continue to weigh on business and consumer confidence, which hinders growth potential.
China: Real GDP Growth and Inflation
Source: Euromonitor International Macro Model
Note: Annual rates in percentages. Revisions in percentage points.
