2024 world's economy brief outlook and China's economy perception

2023 is coming to an end, with the newest global economic annual growth rate perception of 3.0 percent by IMF in October, far better than the pessimistic expectation at the end of 2022. Both the advanced economies and the emerging market and developing economies (EMDEs) performed better than that were expected before. China is expected to grow above 5 percent in 2023 according to the latest IMF prediction. What may happen in 2024? Here we have 6 hints for you.

Lower or flat world economy growth rate

The global economic growth rate may turn down in 2024, mainly because of the slowdown of advanced economies' domestic consumption growth. According to the newest IMF World Economic Outlook,the projected world growth rate drops to 2.9 percent. In 2023, thanks to the excess household savings, the high employment rate, the income growth, and the growing consumption wills after the pandemic, consumption in advanced economies performed far better than expected, contributing a large part of the economic growth. Yet these contributing factors are getting weaker recently. Take the US as an example, since the US government raised its debt ceiling and directly sent checks to the US households during the pandemic, the US households accumulated a historically high volume of personal savings, allowing them to consume more. However, according to the latest FED data, the excess savings have steadily declined during 2023, falling to 10 percent of disposable income by the second quarter of 2023. What’s more, the slowing down of income growth and the labor force in the US also set obstacles for advanced economies.

EMDEs better performing than the advanced economies

EMDEs will continue to perform better than the advanced economies in 2024. Nowadays, more and more EMDEs are putting efforts into their domestic investment, focusing more on the local economic development and people’s livelihood. According to the world’s historical experience, a country’s investment process may last for several years or even decades, making it a long-term EMDEs’ economic impetus.

Inflation between creeping and walking

During 2022 and 2023, we witnessed galloping inflation around the world, for example, the US CPI of urban consumers bears an year-on-year growth of over 6 percent, up to nearly 10 percent from Oct 2021 to Jan 2023, reaching a 20-year high since 1982. The situation started to improve in 2023 and may get better as numbers of countries continually added their domestic interest rates to a high level. Such as, the US federal funds rate is now in a range of 5.25 percent to 5.5 percent, comparing with the current US 10-year breakeven inflation rate at only around 2.2 percent.

China’s better recovery from domestic households demands

China’s household balance sheet got hurt from 2020 to 2022, since the beginning of the unpredictable pandemic and the sudden come high-rocketing commodity price during that period. The good news is that, in 2022-2023, China’s household balance sheet has gradually improved, with the household saving debt ratio increasing from the lowest point of 1.47 to 1.70 in Nov 2023, releasing more household consumption potential for 2024. The latest data also proves that China’s domestic consumption is rapidly recovering. In Nov 2023, China’s total retail sales of consumer goods reached 4.25 trillion yuan, up by 10.1 year-on-year, 2.5 percent points higher than that of the previous month, accumulating to 42.8 trillion yuan for January to November, up by 7.2 percent compared to the previous year.

China’s investment remains steady

In 2023, China’s manufacturing investment and infrastructure investment went well. In the first 11 months, manufacturing investment grew by 6.3 percent, and infrastructure investment grew by 5.8 percent year-on-year. Although real estate investment bears a negative 9.5 percent growth rate, with the recent optimized real estate’s policies, it is projected that China’s real estate industry is approaching its bottom stage, and the industry is going to have a higher-quality development in 2024, after a two-year decline during 2022-2023. In sum, China’s investment will remain steady or slightly improve in the coming 2024.

China’s high-tech exports gain more worldwide popularity

China’s exports will remain vigorous in 2024. During the last two decades, China’s main goods exports changed a lot from the previous labor-intensive and resource-intensive manufactures to the high-skill and technology-intensive manufacturers. In 2023, China is expected to become the world's top auto exporter with over 5 million cars by the end of 2023, a 60 percent annual growth. Now electric cars, Solar cells and li-ion batteries are called China’s "new three" exports compared to the previous clothes, household appliances and furniture. China’s export upgrade can benefit both China and the world. Notice that China’s export growth is a result but not a goal, as Wang Wenbin, China's Foreign Ministry spokesman once said, China does not deliberately seek a trade surplus. China is trying hard to expand its import by expanding duty-free import product categories, holding various import expos and activities, etc.

To conclude, in 2024 world’s economy may go more steadily compared to the huge up and down during 2020-2022. China’s economy will continue to steadily improve, contributing more reliability and opportunities to the whole world.

The author is an associate researcher at the Chongyang Institute for Financial Studies, Renmin University of China (RDCY).

The opinions expressed here are those of the writer and do not necessarily represent the views of China Daily and China Daily website.

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