The International Monetary Fund (IMF) has increased its projection for China’s economic growth in 2024 to 5% from the previous estimate of 4.6%. The upward revision is attributed to the robust first-quarter performance and recent policy initiatives implemented in the country.
This adjustment comes after an IMF mission conducted a routine evaluation in China. The organization now anticipates a growth rate of 4.5% for China’s economy by 2025, up from the previous prediction of 4.1%.
However, looking ahead to 2029, the IMF foresees a slowdown in China’s growth to 3.3% due to factors such as an aging population and diminishing productivity gains. This is a decrease from the previous medium-term forecast of 3.5% growth.
China’s economy surpassed expectations by expanding 5.3% in the first quarter, driven by robust export performance. Growth was higher than 4.6% expected by Reuters and 5.2% expansion in the previous quarter. Data for April revealed subdued consumer spending, though there was an uptick in industrial activity.
Approximately two weeks ago, Chinese authorities unveiled comprehensive measures to bolster the struggling real estate sector, such as eliminating the minimum limit on mortgage rates.
Recent economic indicators for April, including factory output, trade, and consumer prices, point to a successful navigation of near-term risks for China’s $18.6 trillion economy. Despite this, there are concerns among China observers about the sustainability of this rebound.
One of the key challenges is the softness in domestic consumption, which is mainly attributed to weak confidence stemming from a prolonged crisis in the property sector. This sector is considered a major obstacle to achieving a robust economic recovery.
Notably, retail sales in April exhibited their slowest growth rate since December 2022, a period marked by stringent zero-COVID measures in Beijing. Additionally, new home prices experienced the sharpest decline in nine years.
The International Monetary Fund (IMF) expressed support for the recent measures introduced by policymakers to stabilize China’s struggling property sector. The IMF emphasized the importance of continued actions to guide the sector towards a more sustainable trajectory.
