xi's moments
Home | Macro

IMF: Country's growth to stay resilient at 5%

By Zhou Lanxu in Beijing and Zhao Huanxin in Washington | China Daily | Updated: 2024-05-30 06:58

Workers test a tunnel boring machine at a production workshop of a heavy equipment company in Foshan, Guangdong province, on May 18, 2024. [Photo/VCG]

China's economy is expected to achieve a resilient growth of 5 percent this year, faster than previous projections, but the country still needs to scale up property sector support and monetary easing as downside risks persist, said experts from the International Monetary Fund.

Gita Gopinath, first deputy managing director of the IMF, said on Wednesday in Beijing that the IMF has raised its forecasts for China's economic growth to 5 percent this year and 4.5 percent next year, both up 0.4 percentage point compared with its April projections.

The upward revisions are driven by China's strong first-quarter economic data and recent policy measures, Gopinath said during a news conference after the conclusion of the 2024 China Article IV Consultation, the IMF's annual assessment of the Chinese economy, on Tuesday.

"China's economic development over the past few decades has been remarkable, driven by market-oriented reforms, trade liberalization and integration into global supply chains," she said. "However, these achievements have been accompanied by imbalances and rising vulnerabilities, and headwinds to growth have emerged."

While China's ongoing housing market correction is necessary for steering the sector toward a more sustainable path, Gopinath said "a greater- or longer-than-expected property sector adjustment" could threaten economic growth.

The recent policy announcements regarding lending support for affordable housing and lowering mortgage rates to boost housing demand will guide the property market transition and help address challenges, she said.

A more comprehensive policy package will facilitate an efficient and less costly transition while safeguarding against downside risks, Gopinath said, adding that the priority should be to mobilize central government resources to protect buyers of presold unfinished homes.

Sonali Jain-Chandra, mission chief for China in the IMF's Asia and Pacific Department, told China Daily on the sidelines of the conference that there is a need to scale up support for housing delivery as the number of unfinished presold homes remains quite large.

"Fiscal support needs to be greater. We think if that money is used to get rid of the problem of the property sector, then the future growth will be higher, confidence will be higher and revenues will be higher. So the economy will be on a different path," Jain-Chandra said.

Gopinath said that China's growth also faces external risks of rising trade fragmentation, marked by "a very large increase" in trade restrictions, though a large-scale decoupling between the United States and China is yet to be seen.

While the IMF is still at an early stage in assessing the recent tariffs announced by the US on China's exports, Gopinath emphasized that any policies that exacerbate trade fragmentation have negative impacts on the whole world.

"More work still needs to be done on the world trading system in terms of the rules to better address concerns that countries have about each other's use of industrial policy," she said.

Gopinath said that China's near-term macroeconomic policies should be geared to support domestic demand, while subdued inflation has left the scope for further monetary easing.

David Chao, Invesco's global market strategist for the Asia-Pacific region (excluding Japan), said he expects to see China cut key interest rates this year, and more targeted fiscal moves will be directed toward the property sector.

Other international organizations, such as Goldman Sachs and Citigroup, also raised their forecasts for China's full-year GDP to 5 percent following its faster-than-expected growth in the first quarter.

Global Edition
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349