UBS Slashes China’s 2024 Growth Forecast to 3.4% Amid Tariff Pressures

Highlights:

• UBS AG cut China’s 2024 GDP forecast to 3.4%, the lowest among major banks.
• US tariffs may shave over 2 percentage points off China’s growth, despite potential stimulus efforts.
• Beijing’s 5% growth target is increasingly seen as unachievable, as other global banks lower forecasts.

Most pessimistic projection among major global banks

UBS AG (Union Bank of Switzerland) has issued the bleakest outlook yet among major financial institutions for China’s economic growth, slashing its 2024 forecast to just 3.4%. At the time of writing, this is the lowest projection compiled by Bloomberg, as rising US tariffs cast a shadow over China’s export-driven economy.

Tariffs expected to drag GDP by over 2 percentage points

In a note published Tuesday, UBS economists, including Tao Wang, warned that the escalating tariff regime will have a substantial impact on Chinese exports. The bank estimates that, assuming current tariff levels remain unchanged, China's GDP could take a hit of more than two percentage points—even with Beijing’s anticipated stimulus measures. UBS also kept its 2025 growth forecast steady at 3%, which remains the most downbeat among global peers. According to the bank, the ongoing “tariff shock” will not only challenge China’s export sector but also trigger deeper structural adjustments within the domestic economy.

Beijing’s 5% growth target under growing doubt

UBS joins a growing list of institutions, including Goldman Sachs and Citigroup, that have revised their growth expectations for China downwards in recent days. Most analysts are becoming increasingly sceptical about the Chinese government’s ability to achieve its official 5% GDP growth target for the year. UBS did caution, however, that its estimates come with a “high margin of error” due to the “extremely large uncertainty” surrounding the final outcome of US-China trade tensions and future tariff implementations.

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