April 24, 2024, 08:15 AM

ABN Amro Lifts Its 2024 China GDP Growth Forecast, Trims for 2025

Chinese sequential gross domestic product (GDP) growth accelerated in Q1, in line with its base case, benefiting from stimulus and a bottoming out in global manufacturing, noted ABN Amro.

However, the latest data confirm that the recovery is still unbalanced, with the supply side stronger than the demand side, and property still adding to headwinds. Meanwhile, risks from trade spats are rising, wrote the bank in a note.

In line with ABN Amro's base case, China's real GDP growth accelerated in quarterly terms in Q, picking up to 1.6% q/q (Q4 2023 was revised up to 1.2%). The upward revisions in the two preceding quarters resulted in annual growth coming in stronger than expected, at 5.3% y/y (Q4 2023 at 5.2%).

The bank had already flagged in earlier publications that the balance of risks regarding its China growth forecasts has been improving for a while. Although domestic demand remains weak, and many challenges remain, Q1 GDP data raises the likelihood that the 2024 growth target of 5% will be within reach, also assuming further piecemeal monetary easing and targeted (fiscal) support.

All in all, ABN Amro raised its 2024 growth forecast to 5.1% from 4.7%, this is more of a backward revision rather than a 'game changer' in terms of the outlook. Partly reflecting a stronger base from 2024, the bank cut its 2025 growth forecast modestly to 4.5% versus 4.6% prior.

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