ISTANBUL

The World Bank raised its economic growth forecast for China on Tuesday to 4.8% for 2025 in spite of months of trade disruptions between the world's top two economies.

The new gross domestic product (GDP) growth projection is 0.8 percentage points higher than the World Bank's April forecast, and it is closer to the Chinese government's "around 5%" growth target.

Although the economists did not give a precise explanation for the April prediction revision, they noted that China's economy has profited from government assistance, which may diminish in the next year.

Prior to the two nations reaching a trade truce, which is now in force until mid-November, trade tensions between China and the US intensified in April, momentarily raising American tariffs on Chinese imports to well over 100%. US tariffs on China are currently 57.6%, more than twice as high as they were at the beginning of the year.

To boost retail sales, which underperformed compared to expectations, China increased stimulus in late 2024 and has continued to implement targeted consumer trade-in schemes this year.

A significant contributor to the nation's growth, exports, have increased so far this year as shipments to Southeast Asia and Europe have counterbalanced a steep drop in exports to the US. China's exports have also benefited from businesses increasing orders before higher tariffs are imposed.

Export growth assisted China in counteracting factors that impeded the domestic economy, such as the persistent real estate downturn and weak consumer expenditure. However, it is anticipated that progress will decelerate.

Due in part to slowing export growth, the World Bank predicts that China's GDP growth will decelerate to 4.2% in 2026. As China's general economic development slows down in comparison to its previous years of strong expansion, economists also expect Beijing to reduce stimulus to prevent the public debt levels from growing too quickly.

Back in June, the World Bank slashed Chinese growth for 2025 forecast to 2.3%, mainly due to trade disputes, noting it would be the slowest expansion since 2008, except for global recessions.