IMF Upgrades China’s Growth Forecast Amid Uncertain Future

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**China’s Economic Outlook Revised Upward by IMF, but Challenges Remain**

A worker rides a bicycle past a housing complex under construction in Beijing, China.

**Revised Growth Forecasts**

The International Monetary Fund (IMF) has raised its growth forecast for China’s economy to 5% in 2024, an increase from the previous estimate of 4.6%. This upward revision stems from robust economic indicators in the first quarter, particularly strong exports, and the implementation of recent policy measures aimed at stimulating growth.

**Looking Ahead**

The IMF anticipates continued growth in China’s economy, projecting a rise to 4.5% in 2025, up from the earlier forecast of 4.1%. However, looking further into the future, the IMF predicts a gradual slowdown in growth to 3.3% by 2029, a reduction from the previous estimate of 3.5% for the medium term. This deceleration is attributed to an aging population and slower productivity growth.

**Policy Measures and Challenges**

Chinese authorities have taken steps to support the economy, including sweeping measures to bolster the struggling real estate sector, such as removing the floor on mortgage rates. While these measures have been welcomed by the IMF, officials emphasize the need for more comprehensive action.

Gita Gopinath, the IMF’s first deputy managing director, has highlighted the importance of mobilizing central government resources to protect buyers of unfinished homes and ensuring the completion of such projects, which will pave the way for resolving insolvent developers. Additionally, allowing for greater price flexibility while monitoring and addressing potential macroeconomic spillovers can help stimulate housing demand and restore market equilibrium.

**Meeting with Chinese Officials**

During a recent visit to China, Gopinath met with various high-ranking officials to discuss the economic outlook. The IMF delegation emphasized the need for macroeconomic policies to support domestic demand and mitigate downside risks, while stressing that high-quality growth can be achieved through structural reforms that address headwinds and underlying imbalances.

**Employment and Infrastructure**

Chinese President Xi Jinping recently emphasized the importance of promoting high-quality employment for young people, particularly college graduates. The government has introduced policies to support employment in key sectors, while also investing heavily in infrastructure projects to stimulate growth and create jobs.

**Conclusion**

The IMF’s revised growth forecasts for China reflect the ongoing challenges faced by the economy, including a maturing population and declining productivity. While policy measures have been implemented to bolster growth, more comprehensive action is necessary to address these underlying issues and ensure sustainable long-term growth. The government’s commitment to promoting high-quality employment and investing in infrastructure is crucial for mitigating these challenges and fostering economic prosperity for China’s future.

Data sourced from: cnbc.com