Financial district of Pudong New Area. [Photo by Gao Erqiang/China Daily]
As 2023 draws to a close, the IMF's latest annual global economic growth perception released in October is 3.0 percent, which is much better than the pessimistic forecast for the end of 2022. Both developed and emerging market and developing countries (EMDEs) performed better than previously expected. According to the IMF's latest forecast, China is expected to grow by more than 5% in 2023. What will happen in 2024? Here are six tips.
Global economic growth rate declines or remains flat
Global economic growth may slow in 2024, mainly due to slower domestic consumption growth in developed countries. According to the latest IMF World Economic Outlook, the world's projected growth rate will drop to 2.9%. In 2023, consumption in developed countries far exceeded expectations and contributed significantly to economic growth, thanks to excess household savings, high employment rates, income growth, and increased consumer confidence after the pandemic. However, recently these factors have been weakening. Taking the United States as an example, since the U.S. government raised the debt ceiling and sent checks directly to American households during the pandemic, American households have accumulated historically large amounts of personal savings, allowing them to spend more. Became. However, excess savings will decline steadily during 2023, falling to 10% of disposable income by the second quarter of 2023, according to the latest Fed data. Additionally, income growth in the United States is slowing and the labor force is also in decline. Obstacles for developed countries.
EMDE performs better than developed countries
EMDE will continue to outperform developed countries in 2024. At present, more and more of his EMDEs are focusing on domestic investment, focusing on regional economic development and people's livelihood. World historical experience shows that a country's investment process can span years, even decades, and is a long-term economic driver for EMDEs.
Dilation between crawling and walking
In 2022-2023, the world witnessed rapid inflation. For example, the CPI for urban consumers in the United States increased by more than 6% year-on-year from October 2021 to January 2023, and at most increased by nearly 10% to 20%. Reached. The situation will start to improve in 2023 and is likely to improve further as many countries continue to raise domestic interest rates to high levels. For example, the current U.S. 10-year breakeven inflation rate is only about 2.2%, while the U.S. federal funds rate currently ranges from 5.25% to 5.5%.
Recovery from household demand in China will progress further
China's household balance sheets were hurt from 2020 to 2022 by the unpredictable onset of the pandemic and the sudden spike in commodity prices during the period. The good news is that China's household balance sheets will gradually improve from 2022 to 2023, with the household savings-debt ratio rising from the lowest point of 1.47 in November 2023 to 1.70, increasing the household consumption potential in 2024. is expected to further increase. The latest data also proves that China's domestic consumption is recovering rapidly. In November 2023, the total retail sales of consumer goods in China reached 4.25 trillion yuan, an increase of 10.1% from the previous year and 2.5 percentage points from the previous month, and the cumulative total from January to November was 42.8 trillion yuan, an increase of 7.2%. It reached 100 million yuan. compared to last year.
Chinese investment remains stable
In 2023, China's manufacturing and infrastructure investments were strong. In the first 11 months, investment in manufacturing increased by 6.3% year-on-year, and infrastructure investment increased by 5.8%. Although the growth rate of real estate investment is -9.5%, due to the recent optimized real estate policy, China's real estate industry is expected to approach the bottom stage and achieve higher quality development in 2024. It will decrease for two years from 2022 to 2023. In summary, Chinese investment will remain flat or improve slightly in the upcoming year 2024.
China's high-tech exports gain global popularity
China's exports will continue to be active in 2024. Over the past two decades, China's exports of major products have undergone a major shift from previous labor-intensive and resource-intensive manufacturing to highly skilled and technology-intensive manufacturing. In 2023, China is expected to produce more than 5 million cars by the end of 2023, becoming the world's largest car exporter with an annual growth rate of 60%. Currently, electric vehicles, solar cells, and lithium-ion batteries are called China's “new three export products” compared with the previous clothing, home appliances, and furniture. Strengthening China's exports will benefit both China and the world. As Chinese Foreign Ministry Spokesperson Wang Wenbin once said, China is not intentionally pursuing a trade surplus, noting that increasing China's exports is an outcome, not a goal. China is striving to increase imports by expanding duty-free import items and holding various import expos and import activities.
In conclusion, the global economy in 2024 is likely to be more stable compared to the large ups and downs of 2020-2022. China's economy will continue to steadily improve, bringing more confidence and opportunity to the entire world.
The author is an associate researcher at Chongyang Research Institute of Finance, Renmin University of China (RDCY).
The opinions expressed here are those of the author and do not necessarily represent the views of China Daily and the China Daily website.
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