The Chinese economy is expected to witness a growth rate of 5.4% this year, the International Monetary Fund (IMF) stated this week. This projection represents an upward revision from the previous estimate of 5% growth. The IMF attributed this positive outlook to the better-than-expected performance of the Chinese economy in the third quarter, as well as the policy measures implemented by the Chinese government.
As per a press release issued by the IMF, the Chinese economy is on track to meet the growth target set by the government for 2023, underscoring a robust post-Covid recovery. However, the IMF anticipates a slowdown in GDP growth next year, with a projected growth rate of 4.6%. The deceleration in growth is expected to be influenced by ongoing weaknesses in the property market and subdued external demand. Despite this, the IMF’s revised estimate of 4.6% growth for 2023 is an improvement from the 4.2% forecast outlined in the previous month’s World Economic Outlook (WEO).
In their statement, the IMF expressed, “These projections reflect upward revisions of 0.4 percentage points in both 2023 and 2024 relative to October WEO projections due to a stronger-than-expected Q3 outturn and recent policy announcements.” Additionally, the IMF noted that core inflation is expected to rise to 2.1% by the end of 2024 as the output gap continues to narrow.
Looking ahead, the IMF anticipates a gradual decline in growth over the medium term, with a projection of approximately 3.5% growth by 2028. This is attributed to challenges stemming from weak productivity and an aging population.
Gita Gopinath, the IMF’s first deputy managing director, highlighted the importance of continued policy measures to bolster the property market and ensure a swift recovery with reduced economic costs during the transition. Notably, China recently approved a 1 trillion-yuan ($137 billion) sovereign bond issue and enacted legislation allowing local governments to frontload a portion of their 2024 bond quotas, signaling a commitment to support the economy.
The forecast of China’s economic growth comes as the country takes proactive steps to sustain its economic momentum, indicating a positive trajectory for the future. These developments will be important to monitor, as they not only impact China’s economy but also have implications for global economic trends.
This economic news from China underscores the country’s significance as a major player in the global economy, with its performance carrying implications that extend well beyond its borders. As the world continues to grapple with the far-reaching effects of the Covid-19 pandemic, the resilience and growth of China’s economy are poised to have a notable impact on the broader efforts towards economic recovery and stability.
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