The International Monetary Fund (IMF) has raised its forecast for China’s economic growth in 2024 to 5 percent, up from their previous projection of 4.6 percent. This revision is due to “strong” economic performance in the first quarter and recent policy measures implemented by the Chinese government.
Outlook for 2025 and beyond
The IMF’s updated outlook came after a regular assessment visit to China. The organization now expects China’s economy to grow by 4.5 percent in 2025, an increase from the previous forecast of 4.1 percent.
However, the IMF anticipates China’s growth to decelerate to 3.3 percent by 2029, down from the prior projection of 3.5 percent in the medium term. This slowdown is attributed to China’s ageing population and moderating productivity gains.
Robust Q1 growth, sluggish consumer spending
China’s economy expanded by a better-than-expected 5.3 percent in the first three months of 2023, fueled by robust exports. But recent data for April showed that consumer spending remained sluggish, even as industrial activity picked up.
Support measures for real estate sector
To support the struggling real estate sector, Chinese authorities announced sweeping measures about two weeks ago, including the removal of the floor on mortgage rates. Gita Gopinath, IMF’s first deputy managing director, stated that these policy moves are “welcome,” but more comprehensive action is still needed.
Gopinath emphasized that the priority should be to protect buyers of pre-sold unfinished homes and accelerate the completion of these projects, which would pave the way for resolving insolvent developers. She also suggested allowing for greater price flexibility in the housing market, while monitoring and mitigating potential macrofinancial spillovers, to stimulate housing demand and restore equilibrium.
High-level meetings, policy priorities
During her visit to China, Gopinath met with several senior government officials, including the People’s Bank of China Governor, Ministry of Finance Vice Minister, Ministry of Commerce Vice Minister, PBOC Deputy Governor, and National Financial Regulatory Administration Vice Chairman.
Gopinath highlighted that near-term macroeconomic policies should be geared towards supporting domestic demand and mitigating downside risks. She added that achieving high-quality growth will require structural reforms to address underlying imbalances and counter headwinds.
Focus on employment
In a separate development, Chinese President Xi Jinping stressed the need to promote “high-quality, sufficient employment,” particularly by improving employment support policies for college graduates and other young people.
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