Morgan Stanley raises GDP forecast of China

Morgan Stanley has raised its economic growth forecast of China to 4.5 percent for 2025 and 4.2 percent for 2026, due to the de-escalation of Sino-US trade tensions.

However, it noted that China still faces the pressure of deflation, as structural challenges in housing and consumption continue to weigh on the economy.

The bank anticipates that Beijing will launch new fiscal stimulus ranging from 500 billion (HK$543.5 billion) to 1 trillion yuan to support the infrastructure development.

People's Bank of China would cut the interest rate by 15 to 20 basis points, while the required reserve ratio would be lowered by 0.5 percentage point within this year, it said.

In the first quarter of 2025, China's gross domestic product hit 5.4 percent.

Goldman Sachs also raised its economic growth forecast of China by 60 basis points to 4.6 percent for 2025, and that of 2026 increased by 30 basis points to 3.8 percent.

Helen Zhong