Economists Forecast China's Q2 GDP Growth to Slow to 4.6%
0xBroomberg
A survey of 28 economists projects China's Q2 GDP growth at 4.6% year-on-year, down from 5% in Q1 — fixed-asset investment has turned negative, retail sales posted their first decline since late 2022, and the Middle East conflict is driving up energy costs.
How much did Q2 actually slow?
The Nikkei quarterly survey pegs Q2 GDP growth at 4.6% year-on-year; seasonally adjusted quarter-on-quarter growth averages 1%, both below Q1's 5% and 1.3%.
Fixed-asset investment fell 4.1% in January–May, a sharp widening from the 1.6% drop over January–April. May retail sales fell 0.6% year-on-year — the first negative reading since December 2022.
This means → both investment and consumption are decelerating at the same time; the slowdown is broad-based, not a single-sector story.
What is dragging growth down?
ING's chief Greater China economist Lynn Song points to geopolitical uncertainty and a persistent property-market drag weighing on investment.
Lombard Odier's Li Haomin identifies four headwinds: the Strait of Hormuz disruption (the US–Iran war broke out February 28; the strait carries roughly 20% of global oil trade), anti-involution policies, weak construction, and soft consumer demand — creating "significant downside risk" for Q2.
In plain terms = an external energy shock and an internal property-plus-consumption slump are hitting at the same time.
What do the price numbers reveal?
J.P. Morgan's Zhu Feng notes that May PPI rose 3.9% year-on-year while CPI rose just 1.2%. The gap shows price pressure is supply-side — driven by energy and commodity shocks, not strong demand.
Moody's Analytics' Chen Huimin adds that the PPI–CPI spread means firms cannot pass costs downstream and are forced to compress margins, especially in energy-intensive industries.
This means → prices are rising, but not because the economy is running hot — costs are being pushed up from outside, and companies are squeezed on both ends.
Are there any bright spots?
May exports rose 19.4% year-on-year, up from 14.1% in April. Fitch's Alex Muscatelli notes that roughly half the export gains in the first four months came from electrical machinery and equipment; China's position in the AI supply chain will drive two-way trade growth.
The official manufacturing PMI — a monthly gauge of factory expansion intent — edged up from 50.0 in May to 50.3 in June, back above the expansion line.
In plain terms = exports and factory expansion intent are among the few parts of the economy still accelerating, with the AI supply chain as the main driver.
What is the full-year outlook?
The 28 economists' full-year growth forecast averages 4.6%, unchanged from last quarter's survey and within the 4.5%–5% target range in China's latest 14th Five-Year Plan.
MUFG's Fan Xiaochen says fiscal, financial policy and the AI investment boom will support external demand, but the ongoing Middle East conflict and rising Western trade friction with China remain key risks.
On the currency, economists project the yuan at 6.73 per dollar by year-end, a modest appreciation from the 6.82 forecast in March. DBS's Xie Guangwei notes cross-border yuan settlement volumes have risen steadily since the US–Iran war began.
This means → the full-year target is still within reach, but whether the economy stabilises in the second half depends on the Middle East situation and whether domestic demand can pick up the slack.
Content is for reference only, not financial advice.