The International Monetary Fund (IMF) has revised its growth forecast for China upwards to 5% for the current year, citing robust first-quarter figures and recent policy interventions. This adjustment follows a routine assessment visit to China by IMF representatives.
In addition to the upgraded projection for 2022, the IMF now anticipates China’s economy to expand by 4.5% in 2025, reflecting an upward revision from the previous estimate of 4.1%. However, looking ahead to 2029, the IMF foresees a deceleration in China’s growth to 3.3%, attributing this trend to demographic shifts such as an ageing population and a slowdown in productivity growth. This revision marks a slight downturn from the IMF’s earlier forecast of 3.5% growth over the medium term.
China’s economy exhibited a stronger-than-expected growth rate of 5.3% in the first quarter, buoyed by robust export performance. While data for April revealed sluggish consumer spending, industrial activity showed signs of improvement.
Recent policy measures unveiled by Chinese authorities aimed at bolstering the struggling real estate sector, including the removal of the floor on mortgage rates, have been viewed positively by the IMF. However, the IMF’s First Deputy Managing Director, Gita Gopinath, emphasized the need for more comprehensive actions to address underlying challenges.
Gita Gopinath stressed the importance of mobilizing central government resources to safeguard buyers of pre-sold unfinished homes and expedite the completion of such properties to resolve issues related to insolvent developers. Additionally, she advocated for greater price flexibility in the housing market, coupled with vigilant monitoring to mitigate potential macro-financial spillovers.
During her recent visit to China, Gita Gopinath held discussions with key stakeholders, including officials from the People’s Bank of China, the Ministry of Finance, the Ministry of Commerce, and the National Financial Regulatory Administration. She underscored the importance of near-term macroeconomic policies aimed at bolstering domestic demand and mitigating downside risks.
Looking ahead, Gita Gopinath emphasized the necessity of implementing structural reforms to address prevailing challenges and achieve high-quality growth. In line with this objective, Chinese President Xi Jinping emphasized the promotion of “high-quality, sufficient employment” during a recent meeting, particularly highlighting the importance of enhancing employment support policies for college graduates and young professionals.
