China: Moderate slowdown with modest policy support – BNP Paribas

BNP Paribas reports that Chinese GDP growth accelerated to 5.0% year-on-year in Q1 2026 from 4.5% in Q4 2025, but is expected to slow moderately over the year. The bank highlights a K-shaped trajectory, with dynamic exports but sluggish domestic demand and ongoing property sector stress. Authorities are seen maintaining supportive but modest fiscal and monetary policies, while deflationary pressures should ease in 2026.

K shaped growth and easing deflation risks

"Economic growth accelerated to +5.0% y/y in Q1 2026, vs. +4.5% in Q4 2025."

"It stood at 5% in 2025 as a whole and it is expected to slow moderately in 2026."

"Growth remains characterized by a K-shaped trajectory."

"The authorities will maintain supportive fiscal and monetary policies, but their measures may continue to be modest, even in a less supportive global environment."

"Deflationary pressures are expected to decline in 2026, notably thanks to higher global energy prices and anti-involution measures implemented by the authorities."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)