China’s economic growth forecast has been revised upwards by the International Monetary Fund (IMF), indicating a 5 per cent expansion for the current year. This adjustment comes on the heels of a strong first quarter.
That aligns closely with the government’s target of around 5 per cent for the current year. This goal, which some economists view as ambitious, reflects China’s efforts to navigate challenges such as a slowdown in the real estate market and declining investor confidence.
However, the IMF issued a cautionary note, advising the world’s No. 2 economy to scale back certain industrial policies that could potentially impact its trading partners. The IMF emphasized the need for China to focus more on boosting domestic demand.
During its routine assessment of China’s economic health, the IMF also raised its GDP growth projections for 2024 to 5 per cent and for 2025 to 4.5 per cent. Despite the positive outlook, the IMF warned that growth could taper to 3.3 per cent by 2029 due to demographic shifts and slower productivity gains.
The IMF attributed these revisions to the robust performance in the first quarter and recent policy initiatives aimed at bolstering the economy, particularly in response to challenges stemming from a significant downturn in the property market.
In a related development, an IMF official in Beijing underscored the potential for China’s GDP to grow by 18 per cent over a 15-year period with appropriate reforms.
The official stressed the importance of economic reforms to enhance productivity, ensure fair competition among firms, and establish a market-oriented, law-based business environment.
IMF’s Deputy Managing Director, Gita Gopinath, proposed comprehensive measures in Beijing to address China’s property sector issues.
She suggested utilizing central government resources to aid buyers of pre-sold unfinished homes and emphasized the need for macroeconomic policies to support domestic demand and manage external risks.