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China outperformed economic growth expectations in 2023, but the outlook is dimming for the year ahead, says Desjardins Group.

In a new report, the firm reported that real GDP in China grew by 5.2% last year, up from 3.0% in 2022, and slightly ahead of the country’s 5.0% target.

“However, this was primarily driven by the 2.3% surge in real GDP in the first quarter. Growth subsequently slowed as the post-Covid rebound quickly lost steam and major structural issues hampered economic activity,” it said.

Additionally, government efforts to stimulate growth during the year didn’t do much to bolster confidence or address the economy’s long-term issues, it noted.

Looking ahead, “the slowdown is expected to continue, especially given China’s shrinking population, and we expect real GDP to grow 4.4% in 2024,” the report said.

“The government may ramp up its stimulus efforts but, without any measures to diversify the economy, China may continue to disappoint,” it added.