On November 28, 2024, BOC Research Institute released the Economic and Financial Outlook for 2025 (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 2024. It also provides an outlook on the economic and financial situations and the trends of the global banking industry in 2025.
In terms of global economic and financial situations, the Report notes in 2024, the global economy sustained the weak momentum of recovery after the COVID-19 pandemic. Residential consumption grew at a slower pace, while private investment and government spending grew moderately, resulting in a slide in the growth of total demand. Manufacturing and services performed well, promoting the gradual improvement of total supply. Global economic growth was low, while inflationary pressure was obviously alleviated. International trade recovered; fiscal policies maintained the pace of normalization; the European economies and the US kickstarted rate cuts. Global FDI picked up; the money market rates went down; foreign exchanges saw much bigger fluctuations; sovereign debt risk accumulated; stock markets fluctuated more drastically; and average commodity prices moved down. In 2025, the global economy will see a higher downward risk, possibly characterized by the synchronous decline of total demand and supply. The decline of global inflation will be slower. Protectionism will become the biggest threat to global trade growth. The rate cut pace of the US Federal Reserve will be uncertain, and the European Central Bank is expected to cut rates continuously. Global FDI inflows will still grow slowly, and the flows of cross-border securities investment will change. The US Dollar Index will remain relatively strong; global public debts will tend to rise; global stock markets will show a generally upward trend; international oil prices will still be under pressure. The Report also offers special analysis of Donald Trump’s main policy proposition and its impacts, the impacts of central clearing on the liquidity in the US treasury bond market and the benchmark rate, among other hotspot issues.
In terms of China’s economic and financial situations, the Report notes, in 2024, China’s economy operated stably on the whole, moving in a V-shaped trajectory. In the first three quarters of 2024, economic prosperity weakened quarter by quarter. Consequently, China has rolled out a package of wide-ranging and highly targeting pro-economic growth policies since September, leading to positive changes in many fields. Currently, the foundation of economic recovery is still being consolidated, with real estate and domestic demand bottoming out. Initial estimates put the GDP growth at around 5% in 2024. In 2025, changes in internal and external policies will be the biggest variable affecting the trends of China’s economy. Internally, the implementation and enhancement of incremental policies will be the key to economic recovery. Externally, the tariff adjustment targeting China to be introduced after Donald Trump takes office will have significant impact on China’s exports. It’s expected that China’s GDP growth will be around 5% in 2025. Future macro policies should be designed to both stabilize growth in the short term and facilitate reform in the medium and long term, proactively tackle external uncertainties, and consolidate the internal momentum of economic growth.
In terms of the global banking industry, the Report notes, in 2025, in face of the potential shift in monetary policies and changes in political landscapes, the global banking industry will witness growing uncertainties in its operating environment, challenges to its profit growth, continued divergence of expansion, equally severe risk situation, and relatively stable capital adequacy. In 2025, China’s banking industry will actively adapt to the new policy environment, make full use of the opportunities resulting from the pro-growth policies, continue to play its role as a major source of financing for the real economy, drive solid expansion while focusing more on risk management, and consolidate profit growth and capital foundation, to ensure sound operation.
In addition, BOC Research Institute also released the Economic and Financial Outlook for the Yangtze River Delta Region. The report notes, in 2024, the GDP growth in the Yangtze River Delta was generally stable and higher than the national average. Industry and services achieved fast growth, and real estate, rural-urban disparity, fiscal income and the quality and efficiency of the development of listed banks, among some other metrics, outperformed the rest of the country. But demand and the development of different sectors diverged greatly. In 2025, “stabilization” will remain the theme of the economic development of the Yangtze River Delta, and the momentum of “progress” will be steadily reinforced. It’s expected that the regional economic growth will be around 5.5%. Jiangsu Province, Zhejiang Province, Anhui Province and Shanghai Municipality should make all-out efforts to deepen the implementation of various reform policies on all fronts, develop new quality productive forces according to local conditions, and play a leading and exemplary role in high-quality and integrated development. Commercial banks should coordinate efforts with peers across the region in resources sharing and product and service innovation, and continuously boost the support for the development of the Yangtze River Delta and business competitiveness.
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