The International Monetary Fund (IMF) recently raised its forecast for China’s economic growth this year to 5%, up from the previous prediction of 4.6%. This upgrade was due to strong first-quarter figures and recent policy measures implemented by the Chinese government. The IMF now expects China’s economy to grow by 4.5% in 2025, compared to the earlier forecast of 4.1%. However, by 2029, the IMF anticipates a deceleration in China’s growth to 3.3% due to an aging population and slower productivity growth, down from the previous forecast of 3.5%.
China’s economy surpassed expectations by growing 5.3% in the first quarter, supported by robust exports. Data for April indicated sluggish consumer spending but a pick-up in industrial activity. In response to the struggling real estate sector, Chinese authorities recently announced measures aimed at supporting it, including removing the floor on mortgage rates. The IMF welcomed these policy moves but emphasized the need for more comprehensive action to address the challenges in the real estate market. The IMF’s first deputy managing director, Gita Gopinath, urged the mobilization of central government resources to protect buyers of pre-sold unfinished homes and accelerate the completion of such properties.
During her visit to China, Gopinath met with key government officials, including the People’s Bank of China Governor, the Ministry of Finance Vice Minister, and the Ministry of Commerce Vice Minister, among others. She emphasized the importance of near-term macroeconomic policies that support domestic demand and mitigate downside risks. Gopinath also highlighted the need for structural reforms to address underlying imbalances and counter potential headwinds to achieve high-quality growth in the future. Chinese President Xi Jinping recently stressed the significance of promoting high-quality employment and improving support policies for college graduates and other young people during a meeting.
The IMF’s forecast for China’s economic growth reflects the country’s resilience in the face of challenges such as an aging population and slower productivity growth. By raising its growth forecast for this year and the medium term, the IMF acknowledges China’s strong first-quarter performance and recent policy measures aimed at supporting economic growth. The organization’s assessment of China’s economic outlook emphasizes the importance of comprehensive measures to address challenges in the real estate sector and ensure sustainable growth. Gita Gopinath’s recommendations during her visit to China highlight the need for structural reforms and macroeconomic policies that support domestic demand and mitigate risks to achieve high-quality growth.Xi Jinping’s emphasis on promoting high-quality employment and improving support policies for young people aligns with the IMF’s focus on addressing underlying imbalances and promoting sustainable economic growth.
