Analysts at Fitch Ratings said that given the continuing risks, including problems in the real estate sector, Chinese economic growth is likely to slow to 4.6% in 2024 from 5.3% in 2023. Government advisors said they would recommend economic growth targets for 2024 ranging from 4.5% to 5.5%, with the majority favoring a target of about 5%.
"While more active use of fiscal policy will limit downside risks, such measures can maintain a significant budget deficit at a time when the country's financial performance has already deteriorated compared to peers with similar sovereign ratings," analysts warned, adding that they have a “neutral” outlook for the Chinese economy.
According to the latest IMF forecasts, China's GDP will grow by 5.4% in 2023 and slow to 4.6% in 2024 “amid continued weakness in the real estate market and restrained external demand.” Real estate and related sectors have accounted for more than a quarter of China’s economy. Some analysts have said it needs to contract - potentially by as much as 10%.
“Political support with potentially wider use of fiscal policy is likely to be wisely applied to limit downside risks. As for the real estate sector, a sustained recovery is unlikely until there is a significant improvement in home buyer sentiment,” Fitch Ratings said, adding that in 2024, Chinese politicians will have to solve the problems of weak economic growth caused by subdued domestic and external demand.