World Bank Forecasts China's Economic Growth Rate at 4.4% Next Year, Down 0.4 Percentage Points

Structural Issues Pointed Out Such as High Debt and Aging Population

The World Bank has lowered its forecast for China's Gross Domestic Product (GDP) growth rate next year to 4.4%.

According to Bloomberg and other sources on the 2nd, the World Bank in its October report released that day downgraded China's GDP growth forecast for next year by 0.4 percentage points from 4.8% in April. The economic growth forecast for this year was maintained at 5.1%, the same as the April announcement.

The reasons for the downgrade included high debt levels, a slowdown in the real estate market, aging population, and other "long-term structural factors."

The World Bank explained, "In 2024, improved external conditions will help growth in regions outside China, but difficulties within China will persist."

For the economies of the 'East Asia and Pacific (EAP) developing countries,' which include Southeast Asian countries such as Indonesia and Pacific island nations like Papua New Guinea, this year's growth forecast was lowered from 5.1% to 5.0%, and next year's forecast was cut from 4.8% to 4.5%.

The World Bank stated, "China's problems affect the entire region," adding, "A 1% decrease in China's growth rate is associated with a 0.3 percentage point decrease in the region's growth rate."

It further warned that general government debt and corporate debt are rapidly increasing in China, Thailand, and Vietnam, noting that high government debt can reduce investment in both public and private sectors, and that rising interest rates due to increased debt could raise borrowing costs for private companies.

Additionally, it pointed out that household debt is relatively high in China, Malaysia, and Thailand, and that when households use income to repay debt, it can negatively impact consumption.

The World Bank analyzed that the pace of retail sales growth in China is slower than before the COVID-19 outbreak, influenced by falling housing prices, a slowdown in household income growth, precautionary savings, and increased debt.

However, investment bank Goldman Sachs recently assessed that despite concerns about the Chinese economy, demand from China for major raw materials such as oil and copper is increasing at a solid pace.

China's demand for copper, iron ore, and oil increased by 8%, 7%, and 6% respectively compared to the same period last year, exceeding Goldman Sachs' forecasts.

Goldman Sachs evaluated, "This increase in demand is related to strong growth driven by the green economy, power grids, and real estate completions."

[Image source=Getty Images]

This content was produced with the assistance of AI translation services.