World Bank raises China’s GDP forecast for 2024, 2025 By Reuters

(Reuters) – The World Bank on Thursday raised its forecast for China’s economic growth in 2024 and 2025, but warned that household and business confidence, as well as real estate headwinds, would continue to weigh on it next year.

The world’s second-largest economy has struggled this year mainly due to a property crisis and weak domestic demand.An expected increase in US tariffs on its goods under US President-elect Donald Trump could also hit growth.

“Tackling property challenges, strengthening social safety nets, and improving local government finances will be essential to a sustainable recovery,” said World Bank China Director Mara Warwick.

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

The World Bank sees China’s gross domestic product growing at 4.9% this year, up from 4.8% forecast in June, on the back of recent policy easing and a short-term boost in exports.

Beijing has set a growth target of “around 5%” this year, a target it is confident it will meet.

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

Slower household income growth and the negative wealth effect of low house prices are expected to weigh on consumption through 2025, the Bank added.

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

The numbers won’t be officially released until the annual meeting of China’s parliament, the National People’s Congress, in March 2025, and are still subject to change before then.

While the housing regulator will continue efforts to stem a further downturn in China’s property market next year, the World Bank says the sector is not expected to turn around until the end of 2025.

China’s middle class has expanded significantly since the 2010s, reaching 32% of the population in 2021, but the World Bank estimates that some 55% remain “economically disadvantaged,” underscoring the need to create opportunities.

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