A worker rides a bicycle past a housing complex under construction in Beijing on May 17, 2024.
Ngoc Cao | Afp | beautiful images
BEIJING – The International Monetary Fund on Wednesday raised its growth forecast for China this year to 5%, from 4.6% The former was due to “strong” first-quarter numbers and recent policy measures.
The upgrade comes after the IMF’s visit to China for a regular review. The organization now expects China’s economy to grow 4.5% in 2025, up from its previous forecast of 4.1%.
But by 2029, they predict China’s growth rate will slow to 3.3% due to an aging population and slower productivity growth. That is down compared to the IMF Forecasted growth of 3.5% in the medium term.
China’s economy grew better than expected 5.3% in the first quarter, supported by strong exports. April data shows Consumer spending remains sluggishwhile industrial activity increased.
About two weeks ago, the Chinese government announced a review Measures to support the struggling real estate sectorincluding removing the cap on mortgage interest rates.
Gita Gopinath, the IMF’s first deputy managing director, said in a statement that the policy moves were welcome but more comprehensive action was needed.
“The top priority is to mobilize central government resources to protect buyers of pre-sold unfinished homes and accelerate the completion of unfinished homes, paving the way for resolve insolvent investors.”
“Allowing greater price flexibility, while monitoring and mitigating potential macro-fiscal spillovers, could further stimulate housing demand and help restore equilibrium.”
An IMF statement said that during his visit to China this month, Gopinath met with Governor of the People’s Bank of China Pan Gongsheng, Deputy Minister of Finance Liao Min, Deputy Minister of Commerce Wang Shouwen, Deputy Governor of PBOC Xuan Changneng, National Financial Administration Vice Chairman Xiao Yuanqi.
“Short-term macroeconomic policies should aim to support domestic demand and minimize recession risks,” Gopinath said.
“Achieving high-quality growth will require structural reforms to counteract headwinds and address underlying imbalances,” she added.
During Monday’s meeting, Chinese President Xi Jinping emphasized the need promote “high-quality sufficient employment”, according to state media.
“Xi especially emphasized improving employment support policies for college graduates and other young people,” Xinhua news agency reported.
