World Bank raises China’s GDP forecast for 2024 and 2025 by Reuters

(Reuters) – The World Bank on Thursday raised its forecasts for China’s economic growth in 2024 and 2025, but warned that weak household and business confidence, coupled with headwinds in the real estate sector, will continue to pressure the economy next year.

The world’s second-largest economy is facing difficulties this year, mainly due to the real estate crisis and tepid domestic demand. An expected rise in US tariffs on its goods when US President-elect Donald Trump takes office in January could hurt growth.

“Addressing challenges in the real estate sector, strengthening social safety nets, and improving local governments’ financial resources will be essential for a sustainable recovery,” said Mara Warwick, Director of the World Bank’s China Office.

“It is important to balance short-term growth support with long-term structural reforms,” she added in a statement.

Thanks to the impact of recent policy easing and strong exports in the near term, the World Bank expects China’s GDP to grow by 4.9% this year, up from its June forecast of 4.8%.

Beijing has set a growth target of “about 5%” this year, a target it says it is confident of achieving.

Although growth for 2025 is also expected to fall to 4.5%, this is still higher than the World Bank’s previous forecast of 4.1%.

The bank added that the slowdown in household income growth and the negative wealth impact resulting from falling house prices are expected to affect consumption until 2025.

To revive growth, Chinese authorities have agreed to issue a record 3 trillion yuan ($411 billion) worth of special treasury bonds next year, Reuters reported this week.

These numbers will not be officially revealed until the annual meeting of China’s parliament, the National People’s Congress, in March 2025, and could change before then.

While the housing regulator will continue its efforts to stem further declines in China’s real estate market next year, the World Bank said a turnaround in the sector is not expected until late 2025.

China’s middle class has expanded significantly since 2010, to include 32% of the population in 2021, but the World Bank estimates that about 55% of it remains “economically insecure,” underscoring the need to generate opportunities.

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