Hong Kong, October 3 : Amid the worsening situation of the Chinese economy, several economists have revoked their predictions of the country's Gross Domestic Product (GDP) for the year 2024, as the country continues to suffer from pressure facing authorities in the country as they fight to stimulate growth, Nikkei Asia reported.
The average predictions relating to the Chinese GDP quoted by 28 local experts dipped to 4.8 per cent on the year, from 4.9 per cent in the previous survey compiled in July by the Nikkei Aisa. The economists renewed their responses after China announced last week moved to cut interest rates to support the property market decline, Nikkei Asia reported quoting a survey.
Out of the 25 economists who provided full-year growth forecasts in the previous quarterly survey, 16 of those lowered their predictions, while nine maintained the same expectations. However, the overall range of growth predictions over the Chinese shifted downward.
The average estimated Chinese GDP for the quarter of July-September was 4.6 per cent, which was a downfall from the 4.7 per cent growth logged for April-June and is much weaker than the 4.9 per cent expansion recorded in the third quarter of last year, the Nikkei Asia report quoted.
Ken Chen at KGI Financial Holding had cut his annual growth forecast for China to 4.9 per cent from 5.3 per cent which factored in the recent downfall in data, relating to the industrial output, investment to retail and property sales.
Chen claimed that "The current economic growth trend is still downward, mainly due to the bottoming out of the real estate cycle and downward pressure from external demand".
He also referred to the recent stimulus announced by the Chinese government to stop the worsening situation. Stating that this may not be enough to attain the government's annual GDP target of around 5 per cent.
Being asked to identify the top three problems for the Chinses economy out of nine choices, the economists said the "sluggish housing market" topped the list, cited by 17 out of 20. This choice was followed by "weak consumer confidence" and "lack of or insufficient policy," the Nikkei Asia report added.
Another expert Hui Shan, the chief China economist at Goldman Sachs, had reduced her forecast of GDP to 4.7 per cent from 4.9 per cent, saying that the previous set of policies formed to support the property market "may not have been that effective".
Additionally, Tetsuji Sano, the chief Asia economist at Sumitomo Mitsui DS Asset Management, noted that the ageing population which is moving to become dependent on the pension system underdeveloped, and consumer demand is likely to decline throughout society.
According to the report, real estate accounts for about 70 per cent of Chinese household assets, which clearly showcases that the fall in home prices will have a direct negative effect on consumer confidence.
Notably, China has relied heavily on manufacturing and exports, especially as it has struggled to improve sentiment since the COVID-19 pandemic, but momentum in the sector is starting to wane as well. Industrial production growth in August slowed to 4.5 per cent year-on-year, down from July's 5.1 per cent, Nikkei Asia reported.
This comes at a time of heightening trade protectionism, as the US, European Union and Canada imposed extra tariffs on cheap Chinese electric vehicles they see as being unfairly supported by state subsidies. Indonesia has similarly reimposed tariffs on goods such as textile imports, primarily from China, which took effect in August.