IMF lifts China's 2024 growth forecast to 5%

IMF lifts China's 2024 growth forecast to 5%

China's economic growth has been battered in recent years by a long-running debt crisis in the property market
China's economic growth has been battered in recent years by a long-running debt crisis in the property market. Photo: JADE GAO / AFP/File
Source: AFP

The International Monetary Fund on Wednesday raised its 2024 growth forecast for China to five percent, citing recent policy moves by Beijing to boost its struggling economy.

"China's economic growth is projected to remain resilient at five percent in 2024 and slow to 4.5 percent in 2025," the IMF said in a press release.

The decision was "driven by strong first-quarter GDP data and recent policy measures", it added.

The Fund had initially projected 4.6 percent growth for this year -- compared with "around five percent" targeted by authorities in March.

China's economy has been battered in recent years by a long-running debt crisis in the property market, which accounts for a quarter of gross domestic product.

Weak consumer spending and persistent deflation are also dragging on growth.

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The IMF on Wednesday welcomed official steps in recent weeks to boost the housing market.

"The ongoing housing market correction, which is necessary for steering the sector towards a more sustainable path, should continue," it said.

But, it added that "a more comprehensive policy package would facilitate an efficient and less costly transition while safeguarding against downside risks".

And in the medium term, IMF Deputy Managing Director Gita Gopinath told a news conference in Beijing, "growth is expected to slow to 3.3 percent due to ageing demographics and slower productivity growth".

She also pointed to "significant fiscal challenges especially for local governments", adding "sustained fiscal consolidation over the medium term is needed".

This month, Beijing cut the minimum down payment rate for first-time homebuyers and suggested the government could buy up commercial real estate -- some of Beijing's most ambitious moves yet to lift the property market out of an unprecedented debt crisis.

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No details were provided on how many houses would be bought.

A number of cities, including economic powerhouse Shanghai, have also lifted curbs on buying property.

The IMF said China needed "structural reforms to counter headwinds and address underlying imbalances".

"Key priorities include rebalancing the economy towards consumption by strengthening the social safety net and liberalising the services sector to enable it to boost growth potential and create jobs," it said.

Source: AFP

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