The International Monetary Fund (IMF) has raised its forecast for China’s economic growth in 2024 to 5%, up from its earlier estimate of 4.6%.
This adjustment reflects a robust expansion at the start of the year and additional government support aimed at stabilizing and invigorating the economy.
The IMF’s latest projection aligns with China’s target growth rate of around 5% for the year.
The upward revision comes on the heels of a better-than-expected 5.3% growth in the first quarter, indicating a strong recovery trajectory despite ongoing challenges in the housing market, which continues to dampen domestic demand.
Gita Gopinath, the IMF’s First Deputy Managing Director, highlighted the dual forces driving this positive outlook.
“We certainly are seeing that consumption is recovering, but it has some ways to go,” Gopinath noted in a recent interview with Bloomberg News.
“The strength we’re seeing in public investment remains. Private investment is still weak, mainly because of the weakness in the property sector.”
The IMF’s statement emphasized the need for Beijing to enhance monetary and fiscal support, particularly addressing the protracted housing crisis.
Gopinath underscored the urgency of protecting buyers of pre-sold unfinished homes and accelerating the completion of these projects to stabilize the sector.
Earlier this month, Chinese authorities unveiled new measures to support the real estate market.
These include easing down-payment requirements for buyers and injecting 300 billion yuan ($42 billion) of central bank funding to assist local governments in purchasing excess inventory from developers. However, Gopinath argued that these steps should be expanded.
“Fiscal policy should prioritize providing one-off central government financial support for the real estate sector,” she stated, adding that the current low inflation environment offers room for further monetary easing.
Beyond the domestic landscape, the IMF is also monitoring the implications of international trade tensions. Gopinath expressed concerns over the rising number of trade restrictions globally, noting that about 3,000 new trade barriers were introduced in 2023 alone, triple the number in 2019.
These developments are contributing to an emerging trend of geopolitical fragmentation in global trade.
“There has been an increase in more restrictive trade policies across countries,” Gopinath said. “Trade across countries that are more geopolitically aligned is holding up better than trade across countries that are less geopolitically aligned.”
The IMF’s revised forecast underscores a cautiously optimistic outlook for China’s economy.
While strong public investment and government support are driving growth, the ongoing weaknesses in the property sector and global trade tensions present challenges that need to be carefully navigated.
