“Just as growth momentum is showing some signs of recovery as we near the end of 2024, an expected rise in US tariffs under Trump 2.0 will create more drags to GDP growth in 2025. We assume a bigger tariff shock compared to 2018-19, with build-up to an average rate of 45%. But China is now less dependent on the US, has developed a playbook to react, and will add stimulus. We expect annual growth to slow from 4.9% in 2024 to 4.3% (was 4.5%) in 2025 and 4.2% in 2026. Just as growth momentum is showing signs of a recovery as we near the end of 2024[…]. With headwinds from the property downturn ongoing, real GDP growth slowed to a six-quarter low of 4.6% yoy in Q3-24 (Q2: 4.7%). That said, quarterly growth picked up to 0.9% qoq s.a. (Q2: 0.5%), while activity data for September/ October and the October PMIs suggest that growth momentum is regaining some strength as we near year-end. This partly reflects Beijing’s recent pivot from industrial policy to demand management. Improvements at the demand side are particularly interesting: retail sales growth is picking up, fixed investment growth is stabilizing, and the PMI order components are improving.“
Morten W. Langer
