What's next for China's economy?

The year 2024 on the Shanghai Stock Exchange began with a deepening of the December lows, which extended the recent declines in stock prices in China to 9 months. At the same time, the stock market lows from 2022 have been attacked, which carries the risk of breaking them and continuing declines in the coming months. Behind all this is the weakness of the Chinese economy, which is currently most severely affected by the real estate crisis and deflation.

The situation on the stock exchange in Hong Kong is only slightly better. The local index is still above its December lows, but... the balance of forces on his chart is so unfavorablethat further declines remain the baseline scenario. Unless the situation is reversed by data from China published this week.

HK50 daily chart. Source: Tickmill

On Wednesday, January 17, data on the dynamics of China's Gross Domestic Product (GDP) for the fourth quarter of 2023 will be published. This will be one of the most important macroeconomic publications this week an important reference point not only for assessing the condition of China's economy, but also the situation on the Chinese stock market and prospects for the global raw material market.

Analysts predict that in the last quarter, the Chinese economy recorded growth of 1%.. quarter to quarter (Q/Q) and by 5,3 percent year to year (Y/Y), after 1,3% in the third quarter. K/K and 4,9 percent R/R.

Throughout 2023, China's economy is expected to grow by 5,2%, according to market forecasts. This is significantly better than in 2022, when the economy was growing at a rate of only 3%, but still relatively little considering the post-pandemic recovery. However, what may be much more worrying is the fact that the forecasts for the coming years do not look good. Analysts assume that in 2024, China's GDP will grow by 4,6%. Things will be no better in 2025, when, according to market forecasts, China's GDP is expected to increase by 4,5%.