WEF Davos 2024: China keeps weighing on world in view of economists

By Craig Stirling
 

China’s struggle with anemic growth is prompting more observers to doubt its capacity to achieve much of a recovery this year.

Days after data showed the country suffering its longest deflationary streak since 2009, a survey of economists released by the World Economic Forum in Davos revealed that none of them now anticipate anything more than moderate expansion this year.

“China is a notable exception as weak consumption, lower industrial production and distress in property markets weigh on the prospects of a stronger rebound in 2024,” the Forum said in its report.

The analysis is based on a survey at the end of last year among chief economists at public lenders such as the International Monetary Fund, along with counterparts at major private-sector financial and corporate entities. 

While China is all but certain to have met its growth goal of about 5% for 2023 in data due this week, the economy is likely to have lost steam in the fourth quarter. 

Investors expected China’s central bank to trim a key interest rate on Monday, but policymakers kept that unchanged as concerns about yuan volatility and the still-distant prospect of Federal Reserve easing limit their room to support expansion.

The WEF survey showed that most economists’ expectations of inflation in the US and Europe have markedly improved, with two thirds of them now anticipating “moderate” price growth.

Almost seven out of 10 respondents reckon that global fragmentation will quicken, with a majority seeing volatility in economies and stock markets being a likely outcome. 

Meanwhile nearly all of them predict that advances in artificial intelligence will lead to economically significant productivity gains in high-income countries in the next five years.