IMF upgrades China’s growth forecast to 5% on ‘strong’ first quarter and policy measures

BEIJING
—
The
International
Monetary
Fund
on
Wednesday
raised
its
forecast
for
China’s
growth
this
year
to
5%,

from
4.6%
previously,
due
to
“strong”
first
quarter
figures
and
recent
policy
measures.

The
upgrade
followed
an
IMF
visit
to
China
for
a
regular
assessment.
The
organization
now
expects
China’s
economy
to
grow
by
4.5%
in
2025,
up
from
the
previous
forecast
of
4.1%.

But
by
2029,
they
anticipate
China’s
growth
will
decelerate
to
3.3%
due
to
an
aging
population
and
slower
productivity
growth.
That’s
down
from
the
IMF’s

prior
forecast
of
3.5%
growth
in
the
medium
term.

China’s
economy
grew
by
a
better-than-expected

5.3%
in
the
first
quarter,
supported
by
strong
exports.
Data
for
April
showed

consumer
spending
remained
sluggish,
while
industrial
activity
picked
up.

About
two
weeks
ago,
Chinese
authorities
announced
sweeping

measures
to
support
the
struggling
real
estate
sector,
including
removing
the
floor
on
mortgage
rates.

The
policy
moves
are
“welcome,”
but
more
comprehensive
action
is
needed,
Gita
Gopinath,
the
IMF’s
first
deputy
managing
director,
said
in
a
statement.

“The
priority
should
be
to
mobilize
central
government
resources
to
protect
buyers
of
pre-sold
unfinished
homes
and
accelerate
the
completion
of
unfinished
presold
housing,
paving
the
way
for
resolving
insolvent
developers,”
she
said.

“Allowing
for
greater
price
flexibility,
while
monitoring
and
mitigating
potential
macro-financial
spillovers,
can
further
stimulate
housing
demand
and
help
restore
equilibrium.”

The
IMF
release
said
that
during
her
visit
to
China
this
month,
Gopinath
met
with
People’s
Bank
of
China
Governor
Pan
Gongsheng,
Ministry
of
Finance
Vice
Minister
Liao
Min,
Ministry
of
Commerce
Vice
Minister
Wang
Shouwen,
PBOC
Deputy
Governor
Xuan
Changneng,
National
Financial
Regulatory
Administration
Vice
Chairman
Xiao
Yuanqi.

“Near-term
macroeconomic
policies
should
be
geared
to
support
domestic
demand
and
mitigate
downside
risks,”
Gopinath
said.

“Achieving
high-quality
growth
will
require
structural
reforms
to
counter
headwinds
and
address
underlying
imbalances,”
she
added.

In
a
meeting
Monday,
Chinese
President
Xi
Jinping
stressed
the
need
to

promote
“high-quality,
sufficient
employment,”
according
to
state
media.

“Xi
specifically
stressed
improving
employment
support
policies
for
college
graduates
and
other
young
people,”
Xinhua
reported.