Financial News: IMF Raises China Growth Outlook On Strong Q1

IMF Raises China Growth Outlook On Strong Q1 GDP, Policy Measures

05/29/2024 - 08:40:00 (RTTNews)

(RTTNews) - The International Monetary Fund raised China's growth projections citing strong first quarter growth data and recent policy measures, but cautioned about downside risks to growth.

The Washington-based lender expects the second-largest economy to grow 5 percent this year, which is faster than the 4.6 percent projected in April. Likewise, the outlook for 2025 was lifted to 4.5 percent from 4.1 percent.

The 2024 outlook was in line with Beijing's official growth target of around 5 percent.

Over the medium-term, however, growth is seen decelerating to 3.3 percent by 2029 due to aging and slower productivity growth, the IMF staff said concluding the Article IV consultation.

The lender observed that risks are tilted to the downside, which includes a greater- or longer-than-expected property sector adjustment and the increasing fragmentation pressures.

IMF officials urged authorities to adopt a comprehensive policy package to facilitate the property sector adjustment and provide adequate macroeconomic support to boost domestic demand and curb downside risks.

Inflation is forecast to climb but remained low as output remains below potential and core inflation is expected to increase only gradually to average 1 percent this year.

IMF's First Deputy Managing Director Gita Gopinath said given the subdued inflation and output below potential, there is scope for further monetary policy easing.

Further, she said the ongoing housing market correction should continue and steer the sector towards a more sustainable path.

The IMF official noted that China faces considerable fiscal challenges, especially for local governments.

Gopinath said, "Achieving high-quality growth will require structural reforms to counter headwinds and address underlying imbalances."

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