UBS has increased its forecast for China’s economic growth in 2025 to 4%, up from an earlier estimate of 3.4%. The bank also expects China’s consumer prices to fall by 0.3% this year.
Regarding currency, UBS predicts the Chinese yuan will trade between 7.0 and 7.4 per US dollar throughout the rest of 2025.
UBS analysts noted that while both China and the US have recently cut some tariffs and agreed to hold further trade talks, tensions remain. The bank assumes that the US will likely keep its current 30% extra tariffs on Chinese goods for a longer time, along with a 10% hike on imports from other regions.
These trade restrictions could hurt China’s economy. UBS estimates China’s exports to the US may drop by around 30% in the coming months, with total exports down about 6% for the year. As a result, China’s GDP growth may be reduced by 1 to 1.5 percentage points.
UBS also believes the Chinese government will not roll out large-scale economic stimulus as expected earlier. Instead, any fiscal support may come later and in smaller amounts. However, the bank still sees a possible interest rate cut of 20 to 30 basis points this year. Efforts to reduce excess housing inventory are also expected to continue.
Overall, UBS expects China to keep working on opening its domestic market, finding new trade partners, and holding talks with other countries to boost trade.
Be First to Comment