Published 12/26/2024 16:24 | Edited 12/26/2024 16:58
The Chinese economy is showing signs of recovery, with the World Bank raising its GDP projections for 2024 and 2025 this Thursday (26). Driven by economic flexibility measures and strong exports, growth forecast for 2024 rose to 4.9%, approaching the official target of 5% stipulated by the Beijing government.
For 2025, the expectation rose to 4.5%, an increase of 0.4 percentage points, reflecting optimism with the recent economic stimulus measures contracted by Xi Jinping’s government.
Despite the positive scenario, the report highlights that structural challenges and low confidence still need to be addressed to ensure sustainable growth.
Optimistic projections for 2024 and 2025
In the first nine months of 2023, the Chinese economy recorded growth of 4.8%, surpassing the performance of previous years. Additionally, the government revised the 2023 GDP, raising it to 129.4 trillion yuan (approximately US$17.7 trillion), based on a new economic census released this Thursday.
The Chinese economic recovery is the result of the government’s efforts to strengthen production and high technology, in addition to promises of improvements in social well-being and fiscal policies. The expansion of the middle class to 32% of the population since 2010 is an indication of progress towards more inclusive growth, says the economic mobility analysis that accompanies the report.
Challenges on the way
Despite the positive numbers, the World Bank emphasized that reduced consumer and business confidence, combined with structural problems in the real estate sector, limit long-term growth potential. According to Mara Warwick, World Bank director for China, Mongolia and Korea, deep reforms are essential to revitalize the economy. “Addressing challenges in the real estate sector, strengthening social safety nets and improving local government finances will be essential to unlocking a sustainable recovery”, assesses the director.
The real estate sector continues to be a central concern. Its prolonged slowdown threatens local investments and revenues, requiring quick and effective solutions. Furthermore, on the external front, trade tariffs envisaged by US President-elect Donald Trump could create additional obstacles for Chinese exports, which have been a crucial driver of growth.
Next steps
According to the World Bank, to sustain the recovery, China must “balance short-term support for growth with long-term structural reforms.” The confidence of markets and families depends on clear and structured actions. Strengthening the domestic consumption base and adjusting policies to deal with internal and external risks will be decisive in consolidating growth.
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with information from Valor Econômico
Source: vermelho.org.br
