- Shehzad Qazi told CNBC that growth in China will slow further in 2024 as no sector can lead to a recovery.
- The country typically relies on the real estate market, but real estate will no longer be a major driver of GDP.
- But the market may see some improvement in the third quarter as support measures have some impact.
China’s slowdown will deepen next year as none of the country’s sectors can lead a broad-based recovery, the managing director of China’s Big Book said. CNBC.
“The reality is that over the next several years right now, there is no clear driver of growth in China,” Shehzad Qazi said in an interview on Thursday. “So overall growth will continue to slow. I think 2024 will be slower than it was in 2023.”
Although some parts of the economy may provide support, investors cannot expect a “flagship” industry to lead China. For example, continued demand in foreign markets could help sustain the manufacturing sector, but not at a level that could reverse the broader decline this year.
In previous years, the country’s huge real estate market had long been the main driver, accounting for nearly 70% of total household wealth and about a quarter of China’s GDP.
However, heavy debt burdens and a series of defaults have hurt the sector. The extent of the crisis was made clear recently when prominent developer Country Garden failed to do so Meet the bond paymentincentivize Investors race to the exits.
“Real estate will never go back to being the huge driver of GDP and economic growth that it once was,” Qazi said, highlighting that property prices have now reached record lows.
Investors may expect some improvement in the first half of next year, as support measures, including lower mortgage rates, begin to show some impact. However, it is unrealistic to expect Beijing to deliver a comprehensive bailout of the real estate sector, as authorities look to avoid reinflating the property bubble.
Qazi’s forecasts are shared by institutions such as the World Bank and the International Monetary Fund, both of which believe that China’s GDP will stagnate further next year. the International Monetary Fund projects The country’s growth is expected to decline to 4.6% in 2024, compared to 5.4% this year.
In his view, investors were disappointed this year after China’s recovery was overestimated after the end of the country’s coronavirus lockdown policies. He said that although the country saw some organic recovery during the second and third quarters, it lost ground again.
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