China’s GDP recovery likely lost steam in Q2 as consumption sags: Reuters poll

By Ellen Zhang and Kevin Yao

BEIJING (Reuters) – China’s economy likely grew 5.1% in the second quarter from a year earlier, slowing from a strong start in the first three months due to sluggish consumer demand, keeping alive expectations Beijing will need to unleash more stimulus.

While that kind of growth would keep China’s full-year target of around 5% in reach, policymakers still need to deal with a protracted property crisis, weak domestic demand, a sliding yuan and trade disputes with the West.

Gross domestic product (GDP) in the world’s second-biggest economy is expected to expand 5.0% in 2024 year-on-year, according to the median forecast of 82 economists polled by Reuters. Analysts then tip slower growth of 4.5% for 2025.

A further slowdown in the second half of 2024 could prompt policymakers to ramp up economic support, which is now mostly reliant on overseas demand, analysts said.

Investors are watching next week’s key party leaders gathering for hints on the policies to address these challenges that go beyond industrial upgrades.

Policy advisers also believe China could unveil tax and fiscal reforms to allow debt-laden local governments to get more tax revenues to help ease pressures on local finances.

The projected second-quarter growth would be slower than the first quarter’s 5.3% growth and the weakest since the third quarter of 2023.

The Reuters poll expects GDP growth would slow further to 4.8% and 4.7% in the third and fourth quarters, respectively.

“Despite the continued housing crisis, China’s economy breathed a sigh of relief in the first half thanks to its robust exports, which in turn were driven by some rebalancing forces and property-related policy measures,” said Ting Lu, Nomura chief China economist, in a note on Wednesday.

However, he expected headline GDP growth may slow markedly to 4.2% year-on-year in the second half from around 5.0% in the first half, “unless Beijing ramps up stimulus by speeding up fund injections significantly for completing unfinished pre-sold homes.”

Authorities in May allowed local state-owned enterprises to buy unsold completed homes, with the central bank setting up a 300 billion yuan ($41.23 billion) relending loan facility for affordable housing. Analysts say markets now need to be more patient for additional property-supporting measures.

China’s June consumer inflation missed expectations, official data showed on Wednesday, indicating deflationary risks persist.

Analysts polled by Reuters estimate a 0.6% rise in China’s consumer prices for this year, well below the government’s target of around 3%, before picking up 1.5% in 2025.

The government releases second-quarter GDP data and June retail sales, industrial production and investment data at 0200 GMT on July 15.


To counter soft domestic demand and a property crisis, China has boosted infrastructure investment and ploughed funds into high-tech manufacturing.

Central bank governor Pan Gongsheng last month pledged to stick to a supportive monetary policy stance and said the bank will flexibly use policy tools including interest rates and reserve requirement ratios to support economic development.

But the central bank is likely to be wary of cutting lending rates further as aggressive easing could trigger more capital outflows from China’s struggling financial markets and pressure the yuan, which slid to near eight-month lows against the greenback.

It may also hurt banks already battling margin pressures, prompting pay cuts for employees. Analysts say more job losses and pay cuts would intensify deflationary risks.

Analysts polled by Reuters expect a 10-basis points cut in China’s one-year loan prime rate as well as a 25-basis points cut in banks’ reserve requirement ratio in the third quarter.

(For other stories from the Reuters global long-term economic outlook polls package:)

($1 = 7.2755 Chinese yuan)

(Polling by Rahul Trivedi, Devayani Sathyan and Susobhan Sarkar in Bengaluru and Jing Wang in Shanghai; Reporting by Ellen Zhang and Kevin Yao; Editing by Sam Holmes)


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