The Bank of China's (03988.HK) Research Institute report believes that the Mainland economy will rebound in the first half of 2024. Looking ahead, the economy will maintain stable operation in the second half of the year, with demand maintaining stable growth, driving the supply side to continue its good trend and further recovery of the infrastructure. It is preliminarily estimated that the GDP will increase by about 5.1% and 5.2% respectively in the second and third quarters on an annual basis, with an overall increase of about 5.2% for the whole year. It is expected that the CPI and PPI will rise by 0.7% and decrease by 0.5% respectively on an annual basis in the third quarter, and will rise by about 0.6% and decrease by around 1% for the whole year.

The report indicates that the policy of replacing old consumption goods with new ones will continue to be effective in the second half of the year, and consumption will maintain stable growth. Fiscal expenditure will promote infrastructure investment acceleration, and market and policy factors will drive manufacturing investment to grow faster. Exports are expected to maintain steady growth, driving the supply side to continue its good trend. It is expected that the fixed asset investment will increase by about 4.2% and 4.4% respectively in the first three quarters and for the whole year. In terms of exports, the growth trend is expected to continue, with a growth rate of around 6.2% and 4.3% on an annual basis in the third quarter and for the whole year. Looking ahead to the second half of the year, the RMB exchange rate against the U.S. Dollar will remain within a reasonable range. As some developed economies start to cut interest rates, the RMB is expected to appreciate.

The report suggests that efforts should be made to accelerate a new round of fiscal and tax system reform, improve the quality and efficiency of the use of financial funds, and fundamentally solve current fiscal operation balance and local debt problems, gradually shifting fiscal policy from focusing on investment to emphasizing investment and consumption. Monetary policy needs to maintain reasonable and sufficient liquidity. In the real estate sector, support for real estate policies should continue to be increased, active efforts should be made to expand sources of funds, and measures tailored to the local situation should be taken to promote the purchase and storage of existing homes, which can also consider fully introducing the bankruptcy reorganization system to promote the resolution of risks faced by real estate enterprises. The report believes that the deep adjustment of the real estate market will continue for some time in the future, and risks for enterprises will continue to be exposed. We should beware of the impact of real estate on the confidence and expectations of society as a whole changing from short-term to long-term. (ta/W)~