IMF Raises China 2023 Growth: The International Monetary Fund (IMF) has raised its GDP growth forecast for China in 2023 to 5.4% due to a robust post-COVID-19 recovery. However, the IMF anticipates a slowdown in China’s economy in 2024, with growth expected to dip to 4.6%. This deceleration is attributed to ongoing challenges in China’s property sector and subdued external demand.
The IMF’s latest projections mark an improvement from its previous estimates, with growth expectations for both 2023 and 2024 being revised upward by 0.4 percentage points compared to its October World Economic Outlook (WEO). The positive adjustment follows China’s approval of a 1 trillion yuan ($137 billion) sovereign bond issue and the allowance for local governments to front load part of their 2024 bond quotas as part of efforts to bolster the economy.
Gita Gopinath, the IMF’s First Deputy Managing Director, stated that the revised forecasts are influenced by a stronger-than-expected performance in the third quarter and recent policy measures. However, looking ahead, the IMF foresees a gradual deceleration in China’s growth rate, reaching approximately 3.5% by 2028. This slowdown is expected to result from challenges linked to weak productivity and an ageing population.
Also Read:
In response to China’s property market challenges, Gita Gopinath emphasised the need for additional measures to ensure a faster recovery and mitigate economic costs during the transition. She suggested a comprehensive policy package, including actions to expedite the exit of nonviable property developers, address housing price adjustments, allocate central government funding for housing completion, and support viable developers in adapting to a smaller property market.
The combination of a property sector downturn and local government debt challenges poses a risk to China’s long-term growth potential, as local debt has surged to 92 trillion yuan ($12.6 trillion), equivalent to 76% of China’s economic output in 2022, up from 62.2% in 2019. Gita Gopinath stressed the need for coordinated fiscal framework reforms and balance-sheet restructuring at the central government level to address local government debt strains and reduce the debt levels of local government financing vehicles (LGFVs), which have become a significant concern for China’s slowing economy.
LGFVs were initially established by local governments to finance infrastructure investment but have accumulated a substantial debt burden, estimated at around $9 trillion, posing a risk to China’s economic stability.
Our Reader’s Queries
What is the IMF growth revision for China?
China’s post-COVID-19 recovery has been “strong,” leading the International Monetary Fund to upgrade its 2023 gross domestic product growth forecast to 5.4% from 5%. However, the IMF still expects the world’s second-biggest economy to slow down next year.
What is the IMF economic growth in 2023?
The World Economic Outlook Update for July 2023 highlights the challenges that persist despite the near-term resilience of the global economy. The projected growth rate is expected to decline from 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. The increase in central bank policy rates aimed at curbing inflation is still impacting economic activity.
What is the IMF forecast for China in 2024?
China’s growth forecast has been upgraded for both 2023 and 2024, as stated in our recent press release following the Article IV Mission. The upward revisions were approximately 0.4 percentage points each. Our projections now show growth in 2023 at 5.4 percent, with a slight slowdown to 4.6 percent expected in 2024.
What is the economic growth of China in 2023 World Bank?
China’s economy is expected to grow by 5.2 percent this year, but this growth is projected to slow down to 4.5 percent in 2024. This update on China’s economic status for December 2023 highlights the country’s current economic situation. Despite the projected slowdown, China’s economy remains strong and continues to be a major player in the global market.