The International Monetary Fund (IMF) has revised its forecast for China’s economic growth this year to 5 percent, an upgrade from the previous forecast of 4.6 percent expansion. This growth is expected to continue strong in the coming years, with projected growth rates of 5 percent in 2024 and 4.5 percent in 2025. However, the IMF predicts that by 2029, China’s economic growth will slow down to 3.3 percent due to factors such as an aging population and slower productivity expansion.
In recent years, China has experienced several challenges that have impacted its economy negatively, such as a prolonged property sector crisis and weak domestic consumption. Despite these challenges, China’s economy grew at a faster pace than expected in the first quarter of this year, at 5.3 percent year-on-year.
Recent economic indicators for April suggest that China’s economy is navigating near-term risks successfully, but there are concerns about the sustainability of this bounce. Retail sales in April grew at their slowest pace since December 2022 while new home prices fell at the fastest rate in nine years. The IMF welcomed recent steps by policymakers to stabilize China’s property sector but emphasized the need for continued efforts to steer the sector towards a more sustainable path.
Overall, while the IMF remains optimistic about China’s economic growth in the near term, it warns of challenges ahead, particularly with an aging population and productivity constraints. As such, it will be crucial for policymakers to address these challenges effectively if they want to maintain stable economic growth in the coming years.
