GDP growth records quickest expansion since Q2 2023 in the fourth quarter

Temporary factors boost output: GDP growth gathered traction to 5.4% year on year in the fourth quarter of 2024, up from 4.6% in the third quarter and marking the best result since Q2 2023. Q4’s reading beat market expectations. On a seasonally-adjusted quarter-on-quarter basis, economic growth accelerated to 1.6% in Q4, up from the previous quarter's 1.3% growth and marking the fastest increase since Q1 2023. In Q4, the economy was boosted by the front-loading of exports amid fears of higher U.S. tariffs; the trade-in program spurring goods consumption; and broad monetary easing. That said, the bump in GDP growth is unlikely to be sustainable.

Broad-based upturn: The services sector grew 5.8% annually in Q4, picking up from the third quarter's 4.8% increase. In addition, the industrial sector gained steam, growing 5.2% in Q4 (Q3: +4.6% yoy). Finally, agricultural sector growth accelerated to 3.7% in Q4, compared to the 3.2% increase logged in the prior quarter.

Slowdown expected: Our panelists expect GDP growth to slip below its Q4 level in 2025, as the boost from exports front-loading and the trade-in scheme fades, and tighter U.S. trade and tech restrictions weigh on activity.

Panelist insight: Nomura analysts said: “Encouraged by the achievement of its around 5% growth target, Beijing will most likely stick to the same target for 2025. However, we expect GDP growth to slow to 4.0% in 2025 after taking into account incoming payback effects, the intrinsic domestic growth barriers – including the troubled property sector – and the strong headwinds to exports under Trump 2.0.” ANZ analysts said: “With potential higher tariffs and trade disputes with trading partners, the contribution from net export to real GDP growth is expected to drop to 0.7ppt in 2025 from 1ppt in 2024.”

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