Beijing, China- The International Monetary Fund (IMF) has revised its growth forecasts for China, highlighting concerns about a slowing recovery and a weakening property sector. China, the world’s second-largest economy, is now expected to achieve a growth rate of 5% in 2023 and 4.2% in 2024, down from earlier projections of 5.2% and 4.5% in April, according to the IMF’s regional economic outlook report.
The IMF report stated, “In China, the recovery is losing steam, with manufacturing purchasing managers’ indexes entering contracting territory from April to August and conditions in the real estate sector weakening further.”
Furthermore, the report predicts that an extended housing market correction in China could lead to “greater financial stress among property developers and larger asset quality deterioration” in the near term. This could result in a 1.6% decline in China’s Gross Domestic Product (GDP) compared to the baseline by 2025, potentially causing a 0.6% reduction in world GDP relative to the baseline.
On a brighter note, the IMF maintained its growth projection for the Asia and Pacific region at 4.6% in 2023 and declared it “the most dynamic region this year.” The region is set to contribute around two-thirds of global growth in 2023.
However, growth in Asia and the Pacific is expected to slow to 4.2% in 2024 and further decrease to 3.9% in the medium term. This slowdown is primarily attributed to China’s structural deceleration and weaker productivity growth in many other economies.
The report noted that Asia is ahead of the rest of the world in terms of disinflation, with most central banks in the region expected to achieve their inflation targets by the end of 2024. Still, the IMF warned against prematurely easing monetary policy, emphasizing the importance of maintaining financial stability.
As the world watches China’s economic developments closely, the IMF’s updated forecasts serve as an important indicator of the global economic landscape.
