BofA cuts China growth outlook, says Beijing won’t boost easing to revive economy

Investing.com — China’s economic growth is unlikely to show any sign of revival anytime soon, BofA suggests as it downgraded its growth outlook on the world’s second-largest economy, on worries Beijing isn’t willing to step up monetary policy easing. 

BofA cut its China real GDP growth forecast to 4.8% for 2024 from 5.0% previously, and trimmed forecasts to 4.5% for both 2025 and 2026 from 4.7% earlier.

Inadequate easing measures, a persistent confidence problem, and moderating investment growth are weighing on Beijing’s efforts to kick start growth. The strong economic growth seen in Q1 has faded in recent quarters, economists at BofA said in a recent note. 

Consumer confidence has dipped to the lowest level since the economy reopened from the pandemic, pressuring consumer spending. 

Investment growth has also decelerated, with the drag from the property sector offsetting resilience in manufacturing and infrastructure. 

The Chinese economy has seen its growth engine “sputtering” in Q2 and Q3 2024 after an impressive sequential growth pickup in Q1, according to the report.

Export growth, however, has been a bright spot, underpinned by solid external demand and a bottoming out of the global technology cycle, the economists added.

The bar for a step up in monetary policy easing is expected to remain high unless export growth “decelerates meaningfully,” they added, pointing to possible trade frictions in the coming quarters as a catalyst.