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Highlights
- China's 2025 growth forecast downgraded to just 3.4%
- Export tariffs pose significant strain on economic momentum
- Growing skepticism over Beijing’s 5% GDP target
China’s economic momentum continues to face stiff headwinds as more global institutions revise their outlooks downward. The most striking downgrade comes from UBS Group (SWX:UBSG), now forecasting China’s GDP to grow at only 3.4% in 2025 — the lowest estimate among major financial institutions tracked by Bloomberg.
This revised outlook reflects increasing concerns around rising trade tensions, particularly with the United States. The escalation in tariffs is expected to significantly curtail China’s export activity, which remains a critical pillar of the country's economy. Previously, UBS had projected a 4% growth rate for 2025, but economists now believe that the impact of tariffs could slash over 2 percentage points off China’s economic performance.
According to UBS economists, the export shock is expected to initiate a wave of structural adjustments within China’s domestic economy. The ripple effects of such changes could challenge the country’s growth resilience, even in the face of policy support from Beijing. Despite expectations of further stimulus measures, doubts remain high about the government’s ability to reach its official growth target of around 5% for the current year.
Other major institutions have also revised their forecasts. Goldman Sachs Group (NYSE:GS) and Citigroup (NYSE:C) are among those that have recently adjusted their projections downward, reflecting a broader consensus that China may struggle to meet its policy goals amid a complicated global landscape.
While policy interventions from Beijing may cushion the slowdown, uncertainty remains the key theme. UBS acknowledges a wide margin of error in its forecast due to the unpredictable nature of geopolitical and trade developments, particularly concerning future tariff decisions by the U.S.
This tempered outlook arrives at a time when global markets are closely watching China’s role in the global economic recovery. With slowing demand from abroad and internal economic transitions underway, market watchers are recalibrating expectations for one of the world’s largest economies.
As global investors continue to assess these evolving dynamics, attention will likely remain focused on trade relations, domestic policy maneuvers, and the overall resilience of China’s growth model in the face of persistent external pressures.
