A worker rides a bicycle past a residential complex under construction in Beijing, May 17, 2024.
Jade Gao | Afp | Getty Images
BEIJING – The International Monetary Fund on Wednesday raised its forecast for China’s economic growth this year to 5%. from 4.6% This was previously attributed to the company’s “strong” first quarter performance and recent policy measures.
The increase comes after the IMF visited China for its regular assessment. The organization now expects China’s economy to grow 4.5% in 2025, up from a previous forecast of 4.1%.
But they expect China’s growth to slow to 3.3% by 2029 due to an aging population and slowing productivity growth. This is lower than the IMF’s previous forecast of 3.5% economic growth over the medium term.
China’s economy grew 5.3% in the first quarter, beating expectations, driven by strong exports. Data for April showed consumer spending remained sluggish while industrial activity picked up.
About two weeks ago, Chinese authorities announced sweeping measures to support the struggling real estate sector, including the removal of the floor on mortgage rates.
Policy steps are “welcome,” but more comprehensive action is needed, Gita Gopinath, first deputy managing director of the IMF, said in a statement.
“The priority should be to mobilize central government resources to protect buyers of pre-sold unfinished houses and speed up the completion of unfinished pre-sold housing, paving the way for resolving the problems of insolvent developers,” she said.
“Allowing greater price flexibility while monitoring and mitigating potential macro-financial impacts could further stimulate housing demand and help restore equilibrium.”
The IMF report said that during her visit to China this month, Gopinath met with People’s Bank of China Governor Pan Gongsheng, Vice Finance Minister Liao Min, Deputy Commerce Minister Wang Shouwen, PBOC Deputy Governor Xuan Changneng, and the National Financial Regulatory Administration. Vice Chairman Xiao Yuanqi.
“Short-term macroeconomic policies should be aimed at supporting domestic demand and mitigating downside risks,” Gopinath said.
“Achieving high-quality growth will require structural reforms to counter headwinds and address underlying imbalances,” she added.
At a meeting on Monday, Chinese President Xi Jinping stressed the need promote “high-quality, sufficient employment”, According to state media.
“Xi Jinping emphasized the need to improve policies to support the employment of college graduates and other young people,” Xinhua reported.