A more active fiscal policy will be necessary to buffer China’s slowing economy and any fallout from a trade war in the coming year, according to economists surveyed by Bloomberg.
The budget deficit, the difference between government spending and revenue, will likely stretch to between 2.6 and 3 percent of GDP next year, up from 2.6 percent in 2018, the survey of 28 economists concluded. One quarter of the participants predict that the deficit could exceed 3 percent of output.
One key part of government spending, the quota allocated to infrastructure investment, will be at least Rmb 1.35 trillion ($194 billion), the same or higher than this year, the poll said.
“China has a very difficult act to balance between reining in domestic risks, for example in terms of excess debt, and keeping growth on track in order to secure social and financial stability,” Bjorn Giesbergen, an economist and Rabobank, told Bloomberg.