O China’s economic growth will remain unchanged at 5% from 2024 to 2025, but will decelerate to 4.4% in 2026 and 4.3% in 2027, according to the OECD (Organization for Economic Co-operation and Development) Economic Outlook report, released this Tuesday (2).
The projection for this year represents an acceleration compared to the forecast in the September document, which expected the Asian power to grow at a slower pace, at 4.9%.
The OECD warns that headwinds to Beijing’s growth persist and that consumption will be mitigated by high precautionary savings together with the offsetting effect of the exchange program, responsible for advancing purchases of durable goods.
Real estate investment is expected to continue to contract while prices fall as excess capacity is eliminated.
The OECD considers that the PBoC (People’s Bank of China) approach remains “supportive” and the scope for further rate cuts is limited, due to possible damage to banks’ profitability amid asset quality concerns.
“Fiscal policies became more favorable in 2025, with the deficit target increased by one percentage point of GDP. Comprehensive reforms are necessary to ensure sufficient competition in all industries”, he assesses.
Still in Asia, in relation to Japan, the organization highlights that the economy remains relatively resilient, despite global turbulence, and that the Bank of Japan’s (BoJ) monetary policy should be more restrictive, while fiscal policy will support growth in 2026.
The OECD expects Japan to grow 1.3% in 2025 – above the 1% projection in September – and slow to 0.9% per year in 2026-27, with domestic demand as its main driver offsetting the slight negative pressure from external demand due to US tariffs.
About South Koreathe organization projects GDP to rise to 1% in 2025, before rising to 2.1% in 2026 and 2027. The unemployment rate is expected to remain low, while inflation will remain in line with the 2% target.
The Bank of Korea (BoK) is expected to cut interest rates to 2.25% by mid-2026 amid weak domestic demand.
