China’s long-standing role as a global growth powerhouse is under serious strain. A new report from SBI Research paints a sobering picture: the country’s GDP growth is now expected to slow sharply to 4% in 2025, down from 5.3% just a year ago.
The report points to a mix of deep-rooted and growing challenges—ongoing real estate troubles, weak consumer confidence, and mounting global headwinds, including rising protectionism and sluggish trade. Add in stressed local government finances, and the outlook looks increasingly fragile.
“Consumer sentiment in China has been sliding since early 2022 and shows no real sign of bouncing back,” the report notes, underlining how domestic demand remains weak despite policy efforts to revive it.
Another worrying signal: persistent negative inflation, which suggests demand is so soft that prices are falling. Global institutions, including the IMF and major credit rating agencies, are increasingly cautious—some even warning that growth could dip below 4% if current trends persist.
Complicating matters, global trade is expected to slow sharply in 2025, with volume growth dropping to just 1.7%, less than half the rate seen last year. That’s bad news for China, which has historically relied on strong exports to keep its economy humming. But with tariffs rising, global consumption slowing, and supply chains under stress, the external environment is far from supportive.
The slowdown isn’t just China’s problem. For India and other emerging markets, it’s a double-edged sword. On one hand, weaker Chinese demand is easing commodity prices, which helps with inflation. On the other, the ripple effects could weigh on exports and dampen foreign investment across Asia.
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