A worker rides a bicycle in front of an apartment 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 numbers and recent policy measures.
This upgrade came in the wake of the International Monetary Fund's visit to China to conduct a regular assessment. The organization now expects the Chinese economy to grow by 4.5% in 2025, up from the previous forecast of 4.1%.
But by 2029, they expect China's growth to slow to 3.3% due to an aging population and slowing productivity growth. This is lower than the International Monetary Fund's previous 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. April data showed that consumer spending remained sluggish, while industrial activity rebounded.
About two weeks ago, the Chinese authorities announced comprehensive measures to support the faltering real estate sector, including canceling the minimum mortgage rates.
Gita Gopinath, the IMF's first deputy managing director, said in a statement that the policy moves were “welcome,” but more comprehensive measures were needed.
“The priority should be to mobilize central government resources to protect buyers of pre-sold incomplete homes and accelerate the completion of incomplete housing, paving the way for resolving the problem of insolvent developers,” she said.
“Allowing greater price flexibility, while monitoring and mitigating potential macroeconomic spillovers, can further stimulate housing demand and help restore balance.”
The IMF statement said that during her visit to China this month, Gopinath met with Governor of the People's Bank of China Pan Gongsheng, Vice Minister of Finance Liao Min, Vice Minister of Commerce Wang Shuwen, Deputy Governor of the People's Bank of China Xuan Changning, and the 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 fundamental imbalances,” she added.
At Monday's meeting, Chinese President Xi Jinping stressed the need to promote “adequate and high-quality employment,” according to state media.
Xi specifically emphasized improving employment support policies for university graduates and other young people, Xinhua reported.
