Goldman Sachs recently released four economic analysis reports, one of which is a ** analysis of China's economy in 2024.
This company is:Worldwide famousinvestment banks and financial service providers, whose reports are frequently followed by the market and investors.
Although people trust their economic reports, we all understand that the economy is always somewhat uncertain.
China's overall economic situation in 2024**
Goldman Sachs' view of China's economy as a whole in 2024 is as follows:
China's economy briefly recovered in early 2023, but then growth began to slow down. Although the lockdown has been fully lifted, it has been affected by real estate problems, declining consumer confidence and local ** debt problemsThe annual real GDP growth rate is likely to beAround.
If more hedging policies are not introduced, the economy could decline further next year. Such weak growth would further weaken long-term growth expectations. Goldman Sachs feels that China has entered a cycle of policy adjustment, and they expect policy to be more accommodative in the coming months.
Their ** real GDP growth rate in 2024 is about:
In addition, they also said that policy easing will strengthen the economic growth momentum in the first half of 2024. But even if the support policy is strengthened, inflation is likely to be relatively modest, with core inflation rising from 03% to 13%, but still below the 3% target set by **.
Goldman Sachs also noted that although they are growing higher in 2024** than other institutions, they are still cautious about China's long-term economic growth. In the next few years, China's economy will face demographic changes, real estate problems, local debt deleveraging, and global chain risks.
Consumption by Chinese residents in 2024**
In terms of China's household consumption in 2024:
Goldman Sachs believes that consumption will be the main driver of China's economic growth in 2023. They expect real household consumption to increase by 8 percent year-on-year5%, especially as the pandemic-suppressed spending on transportation and entertainment is likely to outpace overall household consumption growth.
In the third quarter of 2023, the household savings rate briefly rose as the pandemic dampened demand for summer travel.
They feel that this trend may continue in 2024, but the increase in unemployment fees may affect the income growth of residents. At the same time, the household savings rate has also remained relatively stable under the influence of urbanization and real estate, and households with houses will increase their precautionary savings.
** of China's real estate in 2024
For real estate, Goldman Sachs believes that since mid-2021, real estate has entered a long-term downward cycle, with many indicators shrinking sharply.
From the peak of 2020-2021, new home sales fell by 40%, new home starts fell by 65%, and real estate investment fell by 20%. Second-hand home prices fell by more than 10%.
Despite the easing of policies, real estate developers are still facing huge financing pressures, and in August, Country Garden defaulted on interest payments. The policy began to extend to large cities, but not much. Policy stimulus such as lower down payment ratios, interest rate cuts, urban village renovation, public housing policies, and funding arrangements may be introduced.
Goldman Sachs believes that the country is unlikely to have a real property tax before 2025. The transformation of urban villages may be larger, but unlike the shantytown transformation in 2015-2018, the urban area is smaller and only affects the construction sector.
Due to factors such as market surplus, unfavorable financing environment, and control of the second-hand housing market, real estate will continue to weigh on China's economy in the next few years. Considering policy easing, 2024 is likely to be slightly better than 2023.
However, it is necessary to be wary of the risk of long-term completion in the future. Despite double-digit growth in new home completions in 2023 and 2024, a sudden contraction in new home starts in 2022-2023 will impact property completions growth after 2025.
Summary:Goldman Sachs believes that since mid-2021, China's real estate has been experiencing a long-term downward cycle, with various indicators declining sharply. Despite the easing of policies, real estate developers are still facing huge financing pressure. They believe that real estate will still be a drag on China's economy in the coming years, and that it may improve slightly in 2024, despite policy easing.
China's inflation level in 2024**
The sharp decline in CPI in the first half of 2023 was mainly due to the decline in agricultural products and durable goods**, with the core CPI basically remaining near zero.
Goldman Sachs expects the core CPI to increase from 0 in 20243% to 13%, with pork being the main driver. The PPI is also expected to start from -54% narrowed to -26%, Goldman Sachs estimates that the PPI will increase from -2 in 20249% rises to 06%。
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