China’s GDP Growth Set to Slow, Raising Expectations for More Stimulus

• China’s economy likely slowed in the second quarter as weak domestic demand offset resilient exports, fueling expectations for fresh policy stimulus. Strong AI-driven industrial output contrasts with soft consumption and private investment amid a prolonged property downturn.
• GDP is forecast to have grown 4.5% year-on-year in April-June, cooling from 5.0% in the first quarter, a Reuters poll of 54 economists showed — down from the 4.7% projected in April and at the low end of the official 4.5-5% full-year target.
• Exports, due Tuesday, likely grew at a slightly slower but still-solid pace in June as firms front-loaded U.S. shipments ahead of possible new tariffs. Investors are watching an expected late-July Politburo meeting for stimulus signals, though analysts expect no aggressive action unless growth slows more sharply.
• Growth is projected to edge up to 4.6% in the third quarter before easing to 4.5% in the fourth. For 2026, GDP is seen cooling to 4.6% from 5.0% in 2025, then to 4.4% in 2027. On a quarterly basis, the economy likely expanded 0.9% in the second quarter, down from 1.3% in January-March. Second-quarter GDP and June activity data are due at 0200 GMT on July 15.
• Analysts expect China to lean on fiscal policy, with the government speeding up spending and a budget deficit of around 4% of GDP for 2026. The central bank is seen holding its seven-day reverse repo rate for the rest of 2026, with a possible 20-basis-point cut to the reserve requirement ratio in the fourth quarter.

(Sources: Reuters)