IMF raises China's 2024 GDP growth forecast to 5%
The International Monetary Fund (IMF) has revised its economic growth forecast for China in 2024 to 5%, as stated in a recent press release. This decision was influenced by strong first-quarter GDP data and recent policy measures taken by Beijing. The IMF had initially projected a growth rate of 4.6% for this year, contrasting with the "around 5%" target set by Chinese authorities in March.
China's economy faces challenges amid property market crisis
China's economy is grappling with a significant debt crisis in the property market, which accounts for a quarter of the country's gross domestic product. Other factors such as weak consumer spending and persistent deflation have also negatively impacted economic growth. Despite these hurdles, the IMF has praised recent efforts by Chinese government to stimulate the housing market, stating that "the ongoing housing market correction, which is necessary for steering the sector toward a more sustainable path, should continue."
IMF suggests comprehensive policy package for China
The IMF has suggested that "a more comprehensive policy package would facilitate an efficient and less costly transition while safeguarding against downside risks." In the medium term, IMF's Deputy Managing Director Gita Gopinath expects growth to slow to 3.3% due to ageing demographics and slower productivity growth. Gopinath also underscored "significant fiscal challenges especially for local governments," emphasizing that "sustained fiscal consolidation over the medium term is needed."
Beijing implements measures to alleviate property market crisis
Earlier this month, Beijing lowered the minimum down payment rate for first-time homebuyers and proposed that the government could purchase commercial real estate as part of its strategy to mitigate the property market's unprecedented debt crisis. However, no specifics were provided regarding how many properties would be acquired. Several cities, including Shanghai, have also eased restrictions on property purchases.
IMF advises structural reforms for China's economy
The IMF has advised that China needs "structural reforms to counter headwinds and address underlying imbalances." It identified key priorities as rebalancing the economy toward consumption by strengthening the social safety net and liberalizing the services sector. These measures are expected to enhance growth potential and job creation, providing a more sustainable path for China's economic future.
