The International Monetary Fund expects the Chinese economy to grow by 5% this year after a “strong” performance in its first quarter, an increase from its previous estimates that indicated growth of 4.6%, but the Fund expects growth to be slower in the coming years.
Target output
The Fund added that it had revised its GDP target for the years 2024 and 2025 with an increase of 0.4%, but warned of a slowdown in growth in China to 3.3% by 2029, due to high rates of aging and a slowdown in productivity expansion.
The Fund now expects the second largest economy in the world to grow by 5% this year 2024, and that growth will slow in 2025 to 4.5%.
Gita Gopinath said, “Our upward revision for this year mainly reflects the fact that GDP growth in the first quarter was stronger than expected, and there were some additional policy measures announced recently,” said the first deputy managing director of the International Monetary Fund in Beijing.
China’s economy grew at a faster-than-expected pace of 5.3% year-on-year in the first quarter, but deflationary pressures still loom large and the protracted real estate crisis remains a major impediment to growth.
Inflation
Gopinath said – in a press conference on the occasion of the Fund’s release of the annual review of Chinese economic policies – that “inflation is expected to rise, but it will remain low, as output is still below potential. Core inflation is expected to rise only gradually, reaching an average of About 1% in 2024.”
A series of recent economic indicators for April, including factory production, trade and consumer prices, suggest that the $18.6 trillion economy has weathered some downside risks in the near term, but Chinese observers say it is not yet clear whether this recovery is sustainable. .
Retail sales, for example, grew in April at the slowest pace since December 2022 when the country imposed strict restrictions to curb the Covid-19 pandemic, while new home prices fell at the fastest pace in 9 years.
China’s economic growth has suffered a severe setback in recent years due to a long-term debt crisis in the real estate market, which represents a quarter of the gross domestic product.
