S&P Global Ratings projects moderate consumption growth in China

30 Jan '24

2 min read

Pic: Adobe Stock

Insights

Though China met its 5-per cent growth target last year, economic momentum at 2023 end was less strong than the headline numbers suggest, S&P Global Ratings said.
Maintaining its 4.6 per cent GDP growth forecast for 2024, it projects moderate consumption growth in the country.
The downward pressures on consumer inflation may not dissipate soon.

Though China met its 5-per cent growth target last year, economic momentum at the end of the year was less strong than the headline numbers suggest, according to S&P Global Ratings, which believes that falling prices at industry and retail levels point to overcapacity in some major goods markets.

Maintaining its 4.6 per cent gross domestic product (GDP) growth forecast for this year, the rating agency projects moderate consumption growth in the country.

At a macroeconomic level, the downward pressures on consumer inflation may not dissipate soon, the rating agency’s Asia-Pacific chief economist Louis Kuijs, wrote on its website.

With relatively strong manufacturing investment, and soft consumption, the strain on prices and profit margins in goods markets may persist.

S&P Global Ratings believes that ‘unrebalanced’ growth, with an emphasis on investment rather than consumption, would raise the risk of deflation.

Meanwhile, following China's solid investment in manufacturing last year, the rating agency anticipates that the comparatively robust capital expenditure growth will continue this year, partly due to encouragement and support from policymakers.

Retail sales growth has been affected by some specific categories that are heavily exposed to the real estate downturn.

The combination of apparently robust real growth and weak nominal growth in industry last year is problematic, Kuijs added.

ALCHEMPro News Desk (DS)

More Textiles News - United States Of America...