Wall Street slashes its outlook on China
2024.09.16 10:08
Investing.com — Wall Street analysts have been downgrading their growth forecasts for China, signaling growing concerns over the country’s economic trajectory.
Despite Beijing’s policy efforts, major investment banks are increasingly skeptical about China hitting its growth targets for the year.
Citi revised its full-year GDP growth forecast for China to 4.7%, down from previous estimates, as August data confirmed weakening momentum.
“The demand side is getting more concerning,” Citi analysts wrote, highlighting the slowdown in trade and domestic demand, which they fear could spill over into production.
While Citi expects some policy support, including a potential 10-20 basis point rate cut, they don’t see a major pivot from Beijing. Looking ahead, they warn that 2025 could be an even tougher year for China’s nominal growth.
Goldman Sachs also lowered its 2024 GDP growth forecast to 4.7%, down from 4.9%, citing disappointing economic activity in August. Year-on-year industrial production growth slowed, and infrastructure investment failed to gain momentum despite record government bond issuance.
The bank also highlighted weak retail sales and persistent struggles in the property sector.
“We believe the risk that China will miss the ‘around 5%’ full-year GDP growth target is on the rise, and thus the urgency for more demand-side easing measures is also increasing,” said Goldman.
Meanwhile, Evercore ISI maintained its 5.0% growth target for China but expressed caution, stating they will only consider lowering it if September data disappoints and Beijing doesn’t ramp up support.
The firm’s analysts expect September to be a pivotal month due to the impact of a 300 billion yuan subsidy package and increased infrastructure investment.
However, they acknowledged that the stimulus measures could pull demand forward, leading to uncertainty in 2025.
“Housing remains mired in crisis with no light at the end of the tunnel,” they added, underscoring the challenges facing Beijing’s efforts to stabilize the economy.
