UBS issues grim growth projections for China, just 3.4pc amid trade turmoil

BERN, SWITZERLAND: UBS AG added to a series of growth downgrades for China with the most pessimistic forecast among major banks, predicting the economy will expand just 3.4 percent this year as US tariffs choke exports.

The Swiss bank, which previously saw growth in 2025 at 4 percent maintained its estimate for next year at 3 percent. Both forecasts are the lowest of all projections for the economy compiled by Bloomberg.

“The tariff shock poses unprecedented challenges to China’s exports and will set forth major adjustment in the domestic economy as well,” UBS economists wrote in a note on Tuesday.

Goldman Sachs Group Inc. and Citigroup Inc. are among global banks that cut their outlook for China in recent days, with most economists doubting Beijing can achieve the official target of around 5 percent growth this year.

Assuming current tariff increases stay in place they will likely drag down growth in China’s GDP by more than 2 percent points despite additional stimulus expected from Beijing, said UBS.

The economists conceded their view has “high margins of error” due to the “extremely large uncertainty” surrounding the eventual tariff rates.

Trump plans to stockpile deep-sea metals to counter China

Exports to the US are expected to fall by two-thirds in the coming quarters and total overseas shipments may drop by 1 percent in dollar terms this year, they added.

“We think some of China’s other trading partners may also raise tariffs on Chinese goods in the coming months, but likely only on specific products and not in similar magnitudes as the US tariffs,” they said.