The ASEAN+3 Macroeconomic Research Office (AMRO) anticipates China’s economy to expand by 5.3% this year, bolstered by the stabilizing property sector and improving external demand.
What Happened: AMRO, based in Singapore, suggests that a gradual recovery in China’s property market, backed by ongoing policy measures, will boost real estate investment and have positive ripple effects on the rest of the region. This forecast was first reported by Bloomberg on Monday.
This growth projection aligns with China’s official target of around 5%, a target deemed ambitious and requiring further governmental support. Despite the economic activity uptick at the start of 2024, the economy still faces numerous challenges.
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AMRO’s chief economist, Hoe Ee Khor, stated, “China will continue to be a powerhouse in the region and the main driver of growth.” He also acknowledged the real estate sector’s weakness, saying it “will take a bit of time to overcome, but it will happen and we expect the drag on growth will bottom out maybe this year.”
The report also pointed out potential risks, including the possibility of China’s growth rate being slower than expected. If growth were to rise by only 4.3% this year, regional growth could be reduced by 1.7 percentage points, affecting trade, investment, and tourism.
Why It Matters: This forecast comes amid a series of events that have shaped China’s economic landscape. Earlier this month, China’s manufacturing sector surged to a 13-month peak, signaling an economic revival. Additionally, China’s largest bank, ICBC, pledged to fund $41 billion in tourism to revive the sector.
Furthermore, a recent survey revealed that Southeast Asian nations prefer China over the U.S. as their primary alignment choice.
This geopolitical shift could have significant implications for China’s economy. Lastly, U.S. Treasury Secretary, Janet Yellen, kicked off her four-day visit to China, pledging to strengthen economic ties while cautioning against global risks associated with China's manufacturing overcapacity.
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