IMF upgrades China’s growth forecast to 5% on ‘strong’ first quarter and policy measures

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A worker rides a bicycle past a housing complex under construction in Beijing on May 17, 2024. 
Jade Gao | Afp | Getty Images

BEIJING — The International Monetary Fund on Wednesday raised its forecast for China’s growth this year to 5%, from 4.6% previously, due to “strong” first quarter figures and recent policy measures.

The upgrade followed an IMF visit to China for a regular assessment. The organization now expects China’s economy to grow by 4.5% in 2025, up from the previous forecast of 4.1%.

But by 2029, they anticipate China’s growth will decelerate to 3.3% due to an aging population and slower productivity growth. That’s down from the IMF’s prior forecast of 3.5% growth in the medium term.

China’s economy grew by a better-than-expected 5.3% in the first quarter, supported 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 removing the floor on mortgage rates.

The policy moves are “welcome,” but more comprehensive action is needed, Gita Gopinath, the IMF’s first deputy managing director, said in a statement.

“The priority should be to mobilize central government resources to protect buyers of pre-sold unfinished homes and accelerate the completion of unfinished presold housing, paving the way for resolving insolvent developers,” she said.

“Allowing for greater price flexibility, while monitoring and mitigating potential macro-financial spillovers, can further stimulate housing demand and help restore equilibrium.”

The IMF release said that during her visit to China this month, Gopinath met with People’s Bank of China Governor Pan Gongsheng, Ministry of Finance Vice Minister Liao Min, Ministry of Commerce Vice Minister Wang Shouwen, PBOC Deputy Governor Xuan Changneng, National Financial Regulatory Administration Vice Chairman Xiao Yuanqi.

“Near-term macroeconomic policies should be geared to support domestic demand and mitigate downside risks,” Gopinath said.

“Achieving high-quality growth will require structural reforms to counter headwinds and address underlying imbalances,” she added.

In a meeting Monday, Chinese President Xi Jinping stressed the need to promote “high-quality, sufficient employment,” according to state media.

“Xi specifically stressed improving employment support policies for college graduates and other young people,” Xinhua reported.

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