On August 23, 2024, people walked along Huguosi Street, Xicheng District, Beijing, which is a food street in Beijing.
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SINGAPORE – Analysts have lowered their forecasts for the country’s full-year GDP growth after a slew of data from China over the weekend painted a rather bleak economic outlook.
“There’s not a lot of good news in the latest round of data, and that’s been the pattern over the past few months,” Elswar Prasad, a professor of international trade and economics at Cornell University, told CNBC’s “Signpost Asia.”
“Both the long-term issues related to property prices and so on, and the short-term issues related to domestic demand, especially private investment and household consumption, have been underperforming,” Prasad said.
He warned that Beijing’s economic outlook for the second half of the year was now “flashing red, or very close to red.”
Duncan Wrigley, chief strategist at Everbright Securities International, told CNBC’s “Squawk Box Europe” that on the positive side, given the scale of the sharp downturn in the housing market, you could say that, unlike many countries, In contrast, China has not seen this situation.
“So, to some extent, the Chinese government has succeeded in isolating this major correction in the housing market from the financial sector and preventing a larger crisis. So instead, they are experiencing this slow, painful, A painful adjustment,” Wrigley Extra.
Data released on Saturday showed that China’s retail sales, industrial production and urban investment grew less than expected in August, all worse than economists polled by Reuters expected. Urban unemployment rose to a six-month high and house prices fell at their fastest annual rate in nine years.
The figures are the latest in a series of disappointing figures for the world’s second-largest economy, which is struggling to recover from the Covid-19 pandemic.
Prasad criticized the Chinese government for being too slow to implement bolder economic stimulus measures. “Using monetary policy requires pretty significant action. Early action is also needed, but we haven’t seen any action from the Chinese government yet,” he said.
With the Federal Reserve widely expected to cut interest rates later this week, Bank of America chief Greater China economist and head of Asia economics Helen Qiao said in an interview with CNBC’s “Street Signs Asia” that the People’s Bank of China may not cut interest rates. As much as their American counterparts.
Slowing economic growth still requires more easing policies, Qiao said, adding that job security and income growth are the main drivers of consumer spending, both of which China currently lacks.
Bank of America lowered China’s 2024 GDP growth forecast to 4.8%, below the government’s 5% target. After the data was released over the weekend, Citigroup also lowered its forecast to 4.7%.
Cornell’s Prasad added that Chinese production, which had been performing well a few months ago, is also starting to soften. “I dare not say that China’s economy is already in very serious trouble, but it is heading towards trouble.”
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