IMF lifts Chinese GDP forecasts for 2023 and 2024
The International Monetary Fund has raised its growth outlook for the Chinese economy after recent resilient economic data.
The IMF said on Tuesday that it expects Chinese GDP to expand by 5.4% in 2023, before slowing to 4.6% in 2024, due to continuing weakness in the property market and subdued external demand.
But these forecasts were upgraded from previous estimates for growth of 5% for 2023 and 4.2% for 2024, respectively “due to a stronger-than-expected Q3 outturn and recent policy announcements”, according to the IMF's deputy managing director, Gita Gopinath.
However, the IMF warned that financial stability risks are “elevated and still rising”, with financial institutions having lower capital buffers and gross asset quality risks.
“To improve financial system resilience and mitigate risks, strict application of prudential policies and a strengthened framework for bank resolution are needed,” Gopinath said.
“Supportive macroeconomic policies are needed to bolster activity amid the needed property sector adjustment and structural reforms to address local government debt. A reorientation of fiscal expenditures toward households and additional easing via interest rates would support growth and investment. Greater exchange rate flexibility would help absorb external shocks and strengthen monetary policy transmission.”
Gopinath also said that "broad-based and pro-market structural reforms" were needed to boost productivity, support rebalancing and decarbonisation, to build a more sustainable growth.