BofA Lowers China’s Growth Forecast, Indicates Beijing Won’t Intensify Easing to Revive Economy

China’s economic growth is not expected to revive anytime soon, according to Bank of America (BofA), which has revised its outlook for the world’s second-largest economy amid concerns that Beijing is reluctant to implement further monetary policy easing.

BofA has lowered its real GDP growth forecast for China to 4.8% for 2024, down from a previous estimate of 5.0%, and has also reduced projections for 2025 and 2026 to 4.5%, from 4.7%.

The report indicates that insufficient easing measures, ongoing issues with consumer confidence, and slowing investment growth are hindering Beijing’s attempts to stimulate economic growth. Economists at BofA noted that the strong growth recorded in the first quarter has diminished in subsequent quarters.

Consumer confidence has reached its lowest point since the economy reopened following the pandemic, impacting consumer spending. Furthermore, investment growth has slowed, with challenges in the property sector offsetting gains in manufacturing and infrastructure.

The Chinese economy has struggled to maintain momentum, experiencing a slowdown in growth during the second and third quarters of 2024 after a strong start in the first quarter.

On a positive note, export growth remains robust, supported by strong external demand and an improvement in the global technology cycle. However, the threshold for any significant easing of monetary policy is expected to remain high unless there is a substantial slowdown in export growth. Potential trade frictions in the coming months could serve as a catalyst for further developments.