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Morgan Stanley Boosts China's 2025 GDP Growth Forecast to 4.5%

Word on the StreetTuesday, May 20, 2025 10:07 pm ET

1min read

Morgan Stanley has raised its economic growth projections for China for the current and next year. The investment bank cited several factors driving this upward revision, including robust global demand for certain products and services, as well as positive developments in trade policies and corporate earnings.

The bank has increased its forecast for China's GDP growth in 2025 from 4.2% to 4.5%, attributing this revision to a reduction in tariff barriers. Additionally, Morgan Stanley has upgraded its projection for China's GDP growth in 2026 from 4% to 4.2%.

One of the key drivers highlighted by Morgan Stanley is the strong global demand for specific products, particularly in the United States market. This demand is expected to fuel the expansion of certain companies into new regions, including the United States. The bank anticipates that this strategic move will be a significant growth driver for these companies over the next two years.

Morgan Stanley also anticipates that China will implement a comprehensive fiscal package valued between 500 billion and 1 trillion yuan to support infrastructure projects, including urban renewal. This initiative is expected to stimulate economic activity and create new opportunities for growth.

Furthermore, the bank predicts that the People's Bank of China may reduce the policy interest rate by 15-20 basis points and the reserve requirement ratio by 50 basis points for the remainder of this year. These monetary policy adjustments are aimed at providing additional liquidity to the economy and supporting continued growth.

Additionally, Morgan Stanley noted that the structural improvements in the Chinese economy, along with favorable trade policies and earnings progress, are contributing to the optimistic outlook. These factors are expected to support sustained economic growth and enhance market confidence.

The investment bank's revised forecasts reflect a more positive stance on China's economic prospects, driven by a combination of domestic and international factors. The upward adjustment in growth expectations underscores the resilience of the Chinese economy amidst global uncertainties.

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