IMF expects China's gradual growth, projects 4.4% figure in 2023, 2024

In the near term, a recalibration of the COVID strategy, including an acceleration in vaccination and further action to end the property sector crisis would support growth, IMF said after completing its Article IV Mission to China recently.

An International Monetary Fund (IMF) team, led by Ms. Sonali Jain-Chandra, Mission Chief for China, conducted virtual discussions on the 2022 Article IV Consultation from November 2 to 16, 2022. The mission held constructive discussions with senior officials from the government, the People’s Bank of China, private sector representatives, and academics to exchange views on economic prospects and risks, reform progress and challenges, and policy responses. The IMF's First Deputy Managing Director, Ms. Gita Gopinath, also held virtual meetings with several senior policy officials and issued the following statement at the end of the virtual visit:

“Under the zero-COVID strategy, China weathered the initial impact of the pandemic well, allowing the economy to recover swiftly from the early-2020 lockdowns and to expand the global supply of medical goods and durable goods significantly at a critical time for the global economy. However, China’s growth has since slowed and remains under pressure amid recurring COVID outbreaks, deep challenges in the property sector, and slowing global demand,” IMS said in a release.

“Although the zero-COVID strategy has become nimbler over time, the combination of more contagious COVID variants and persistent gaps in vaccinations have led to the need for more frequent lockdowns, weighing on consumption and private investment, including in housing. The regulatory tightening in the property sector, while well-intended to rein in high leverage, has added to severe financial strains for developers, leading to a rapid slowdown in housing sales and investment, along with a sharp decline in local government land sale revenues,” it noted.

“Risks remain tilted to the downside, with the economy facing external headwinds from a global slowdown, a further rise in energy prices, and further tightening in global financial conditions. Domestically, recurring COVID outbreaks and lockdowns and ongoing challenges in the property sector remain key risks. Longer term, rising geopolitical tensions pose risks of fragmentation through financial decoupling pressures, and limits to trade, foreign direct investment, and knowledge exchange around technology,” it added.

Fibre2Fashion News Desk (DS)