IMF upgrades China's 2023 growth forecast to 5.4%, sees 2024 slowdown

This growth figure supports predictions of full-year growth of 5 per cent or more. The revision followed a recent IMF staff visit to China for Article IV mission led by Sonali Jain-Chandra, IMF mission chief for China.

IMF, however, predicted a slowdown next year, with GDP growth potentially dropping to 4.6 per cent—an improvement over the October estimate of 4.2 per cent. That would be due to continuing weakness in the property market and subdued external demand.

IMF also expects a consistent reduction in growth to around 3.5 per cent by 2028, due to low productivity and an aging population.

IMF first deputy managing director Gita Gopinath said the Chinese government’s challenge is to minimise economic costs and contain risks to macrofinancial stability. Core inflation is projected to increase to 2.1 per cent by end-2024 as output gap continues to narrow, she said.

“Financial stability risks are elevated and still rising, as financial institutions have lower capital buffers and growing asset quality risks. To improve financial system resilience and mitigate risks, strict application of prudential policies and a strengthened framework for bank resolution are needed,” she said.

“With headwinds such as aging population, diminishing returns on investment, and geoeconomic fragmentation likely to constrain medium-term growth prospects, broad-based and pro-market structural reforms aimed at boosting productivity, supporting rebalancing and decarbonization would help support new engines of growth and foster a more balanced, inclusive, and green growth,” she added.

ALCHEMPro News Desk (DS)