Fidelity’s big outlook for 2024: China is the big question mark in the Asian region

By: Trademagazin Date: 2023. 12. 19. 11:46

The performance of the U.S. dollar and the wavering of investor optimism about China’s recovery have broken the strong growth story of many Asian economies over the past year. According to Fidelity, China could face three different macroeconomic scenarios in the coming year.

Possible scenarios for Chinese growth

According to the first, which is also Fidelity’s base scenario, the consolidation of China’s economy will continue, and recovery will gradually accelerate in parallel with the stabilization of the real estate sector and the revival of consumption. According to experts, the probability of this scenario, in which China’s economic growth will be around 4-5% in 2024, is 65%. Policymakers will provide more fiscal and monetary support to sustain growth, such as effective measures to address deep structural problems that will help rebalance the economy and move away from the old investment-led model. These economic policy steps would also help to stabilize the real estate market, which includes about two-thirds of the wealth of households in China, thus restoring consumer confidence in a spectacular way.

In the event of a recession in developed countries, the strengthening of the Chinese domestic market would help offset the decline in foreign demand.

“Although we believe that the high growth model of previous years is not sustainable; the improving macroeconomic environment could improve corporate profits and ultimately have a positive effect on investor sentiment. For real estate, we would expect prices to stabilize rather than a resumption of growth, and we would keep a close eye on debt levels.”

– said István Al-Hilal, Central and Eastern European director of Fidelity International.