Two international banks downgraded their outlook on China's economy this year amid its trade wars with the US, The Standard reported Tuesday.

Morgan Stanley brought down its forecast on China's gross domestic product or GDP to 4.2% from the previous estimate of 3.9%, while UBS trimmed its estimates to 3.4% from 4%, citing the uncertainties brought by the US tariffs, the report said.

Morgan Stanley also predicted that the central government will introduce a stimulus package worth 2 trillion yuan this quarter and an additional fiscal stimulus of up to 1.5 trillion yuan in the second half, the report said.

UBS believes inflation in the mainland will remain below zero in 2025 and 2026, the report said.

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