UBS, the global investment bank, has lowered its forecast for China's economic growth in 2025 to 3.4%, a significant reduction from its previous estimate of 4%. This adjustment, reported by Bloomberg, underscores the severe impact that escalating tariff tensions are having on the world's second-largest economy.
The downward revision, as detailed by UBS economists including Tao Wang, highlights the "unprecedented challenges" that tariff shocks pose to China's exports, necessitating substantial adjustments within the domestic economy. This revised forecast is currently the most conservative among major global investment banks, including Goldman Sachs and Citigroup, both of which have also recently reduced their projections for China.
Despite anticipated large-scale stimulus measures from Chinese authorities, UBS warns that the growth rate could drop by more than 2 percentage points if the announced tariff increases remain. In response, the Chinese government is expected to introduce additional measures aimed at bolstering domestic demand, potentially raising growth by up to 2 percentage points to counter the tariff impact.
Furthermore, UBS predicts that the People's Bank of China may reduce policy interest rates by 30 to 40 basis points, possibly as soon as this month, to stimulate economic activity. However, the forecast for China's exports is bleak, with an expected two-thirds reduction in exports to the U.S. over several quarters and a 10% decrease in total exports in dollar terms for the year.
The situation is compounded by the possibility that other trading partners might impose tariffs on Chinese imports, although these are expected to target specific goods and will likely be less severe than U.S. tariffs. Nevertheless, the uncertainty surrounding the final tariff rates introduces a significant margin of error into these projections.
Bloomberg's analysis suggests that while China's economy showed resilience in the first quarter, the full impact of U.S. President Donald Trump's additional 145% tariffs will become more evident in the coming months. Despite these challenges, China had set a growth target of around 5% for the year, amid the escalating trade war.
Meanwhile, the ASEAN+3 Macroeconomic Research Office (AMRO) has forecast that the implementation of U.S. reciprocal tariffs could slow Asia's growth to 3.8% this year and 3.4% next year. This revised forecast, which reflects recent U.S. tariff announcements, suggests that the Asian economy is heading towards its slowest growth since 2022. However, countries like Vietnam and Cambodia, heavily reliant on exports to the U.S., could mitigate these impacts through monetary policy easing and increased fiscal spending.
Copyright ⓒ 뉴스로드 무단 전재 및 재배포 금지
본 콘텐츠는 뉴스픽 파트너스에서 공유된 콘텐츠입니다.
