On September 26, 2024, BOC Research Institute released the Economic and Financial Outlook for 2024Q4 (hereinafter referred to as the “Report”) in Beijing. The Report reviews the economic and financial operations both globally and in China as well as the operations of the global banking industry in 2024Q3. It also provides an outlook on the economic and financial situations and the trends of the global banking industry in 2024Q4.
In terms of global economic and financial situations, the Report notes in 2024Q3, the momentum of global economic growth weakened. Total demand cooled due to slowing growth of residential consumption, rebounding fixed assets investment and declining government spending. Total supply kept stable, with global food supply strained, the momentum of manufacturing recovery moderating and services performing well. Global inflationary pressure was further eased. International trade maintained the trend of recovery. The pace of normalizing fiscal policies varied worldwide, and the multiplier effects of spending tended to decline. The US Federal Reserve and European Central Bank entered a rate cut cycle, and the Bank of Japan hiked interest rates while reducing bond purchases. Global FDI diverged across regions; global foreign exchange markets entered a new stage; global stock markets experienced intensified fluctuations; commodity prices showed a greater disparity in movements. In 2024Q4, global economy will face mounting downside risk, likely to see synchronous declines in total demand and total supply. Consumption growth tends to drop in major economies, while private investment will recovery slowly and international trade growth will be exposed to growing uncertainties. The momentum of global production recovery will moderate, and the decline of services is expected to be slower than manufacturing. Global inflation may be further curbed. The US and European countries will continue with rate cuts, while Japan will maintain the logic of combining rate hike with the reduction of the balance sheet size. FDI will maintain the trend of divergence; foreign exchange markets will witness greater fluctuations; global stock markets will enter a stage where different sectors lead rises in turn; fluctuations of commodity prices will intensify. The Report also offers analysis of hotspot topics, i.e. the rise of Global South and China’s approach to deepening South-South cooperation, and the structure of the US treasury bond market and its interaction with the US Federal Reserve’s monetary policies.
In terms of China’s economic and financial situations, the Report notes, China’s economy sustained the momentum of recovery, but the level of economic prosperity declined. Unbalanced economic recovery remained a major problem, with highlights coexisting with challenges. In terms of highlights, foreign demand maintained fast growth, manufacturing investment had a stronger momentum of growth, new quality productive forces were fostered at a faster pace, and industries extended the trend of upgrade. In terms of challenges, demands remained inadequate, real estate declined further, and market confidence and expectation is still weak. According to preliminary estimates, GDP growth was around 4.8% in 2024Q3. In 2024Q4, the foundation for China’s economic recovery is to be further consolidated. Export growth may slow down; the improvement of domestic demand will be crucial to economic recovery, but how much it will improve largely depends on policy intensity and effects. As the Chinese government has announced a package of policies like lowering required reserve ratio and interest rates and cutting rates on existing housing loans since September, the target GDP growth of 5% for the year is expected to be achieved. Future macro policies need to be better targeted, shifting the focus from supply to both supply demand, and enhancing the coordination among fiscal and monetary policies, to promote the steady recovery of demand, accelerate resolution of risks in key areas, and improve market expectation and confidence, so as to navigate the current economic challenges and expedite the replacement of old growth drivers with new ones.
In terms of the global banking industry, the Report notes, Since the start of 2024, the momentum of global economic recovery has been insufficient, inflationary pressure of major economies has continued to ease, and a shift in monetary policies has exerted impact on banking operation. With growing uncertainties in operation, the global banking industry saw a notable divergence in the expansion of scale, a difficult recovery in profitability, further deterioration in asset quality, and persistent pressure in capital replenishment. In 2024, China’s economy operated steadily on the whole, laying sound groundwork for banking operation. China’s banking industry overcame numerous challenges, focused on domestic fundamentals, seized the opportunities from the high-level opening-up of the financial sector, and steadily optimized international layout. These efforts have enabled it to drive the high-quality development of the real economy while ensuring its solid operation, with the scale further growing, profitability kept relatively stable and asset quality generally improving.
In addition, BOC Research Institute also released the Economic and Financial Outlook for the Yangtze River Delta Region. The report notes, in the first half of 2024, the economic growth of the Yangtze River Delta was faster than the national average, with industry and services recovering fast and investment maintaining a good momentum of growth. But Jiangsu Province, Zhejiang Province Anhui Province and Shanghai Municipality diverged in the development of foreign trade, consumption, and real estate. In 2024Q4, backed by enhanced policies, the economy of the Yangtze River Delta is expected to sustain the trend of steady development, with the full-year GDP growth reaching around 5.5%. The county-area economy in the Yangtze River Delta sets pace for other parts of the country, still contributing to over one third of the economic aggregate of the Yangtze River Delta. Going forward, continued efforts should be made to further tap their leading and demonstration role in the country, and explore the path to the sustainable development of county-area economy based on local conditions, with the focus on five aspects, i.e. building a distinctive industrial system, stimulating the vitality of the consumer market, deepening reforms in key areas, narrowing the urban-rural income gap, and improving the quality and efficiency of financial supply.
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