In Q4 of 2024, China’s official manufacturing and non-manufacturing PMIs both edged above 50, indicating growth in both sectors. Improved demand led to a rise in the services production index, while industrial production (IP) also remained robust in December. Standard Chartered economists have revised their GDP growth forecast for both Q4 and the full year of 2024, expecting a growth rate of 5.3% y/y for Q4 and 5% for the full year.
The average manufacturing PMI returned to expansionary territory in Q4 for the first time since Q1-2023, with new orders reaching an eight-month high. The non-manufacturing PMI also increased to a nine-month high in December, driven by a rebound in services and construction activity. GDP growth is expected to have accelerated from the previous quarter, with net exports likely being a key contributor to growth. The decline in real estate investment is expected to have eased, with the housing market showing signs of stabilization.
Inflation is forecasted to have stayed low in 2024, with annual average CPI inflation expected to remain at 0.2%. CNY loan growth is expected to have slowed to 7.5% y/y in December, with the impact of the debt-to-bond swap programme likely offsetting any improvement in household loan growth. Total social financing (TSF) growth is expected to have increased due to strong government bond issuance.
Overall, the growth momentum continued in December, with improved demand driving growth in both manufacturing and non-manufacturing sectors. The positive signals from the housing market and the record-high goods trade surplus in Q4 indicate a resilient economy. With inflation remaining low and government bond issuance supporting growth, China’s economy is poised for continued expansion in 2024.
