Nearly half of the world’s GDP comes from China and the US combined. China has overtaken the eurozone as the world’s number two largest GDP contributor behind the US. Having had years of double-digit growth analysts were expecting China to overtake the USA’s GDP contribution as early as 2030. However, the recent slower growth path that China has taken due to its weak post-covid rebound has had Bloomberg economists extend the time it could take China to catch up with the US.
Bloomberg economists now see the mid-2040s as the time it will take China to overtake the US. Concerns over China’s property market and increasing worries about Beijing’s management of China’s economy means Bloomberg economists now sees growth slowing to 3 1/2% in 2030 to around only 1% by 2050. Those projections are revised down from the growth of 4.3% in 2030 and 1.6% in 2050. These downward revisions reflect the slower rate of China’s economic growth which has expanded by just 3% last year, which is one of its lowest rates of growth in decades.
Furthermore, the Covid recovery that was expected has not materialised. Export levels have fallen and difficulties in the property sector have become more entrenched. This has resulted in a flurry of downwardly graded growth forecasts for 2024 from analysts at major banks.
So, this is prompting the question as to whether China has reached its peak. Some long-term challenges for China include a population drop last year, regulatory crackdowns, and geopolitical tensions with the US and other Western governments, particularly over Taiwan, raising concerns about China’s ongoing growth prospects.
What does this mean?
Well, it means China’s growth is going to be in increasing focus over the next few months. Can Beijing overcome its structural issues? Will the property market worries spill over into bank worries? Will there now be a more comprehensive support package for China post-Covid? Keep a careful eye on Beijing’s response as it could offer opportunities for medium-term buys into China’s economy if it takes steps to turn around these latest growth headwinds.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Recommended Content
Editors’ Picks
AUD/USD: The constructive outlook persists for now
AUD/USD gave away part of its recent strong rally and flirted with the 0.6850 region on the back of the firm performance of the US Dollar as well as the persistent risk-off mood in response to increasing geopolitical jitters.
EUR/USD: the 1.1000 region is expected to hold the downside
EUR/USD retreated for the third consecutive session on turnaround Tuesday, this time on the back of further gains in the Greenback and the generalized offered stance in the risk-linked universe.
Gold looks firm around $2,670 on Israel-Iran crisis
Gold prices maintain their bullish bias around the $2,670 region per ounce troy on the back of increasing tension in the Middle East after Iran launched a missile attack on Israel.
Bitcoin dips below $63,000 amid neutral traders' sentiment shown by on-chain metrics
Bitcoin (BTC) extends correction and trades below $63,000 at the time of writing on Tuesday, approaching a key support level after dipping more than 3% the previous day.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.