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The IMF has upped China’s growth forecast to 5 percent

The 0.4 percent hike was based on the country’s strong first quarter performance and aligns the projection with China’s own goal for 2024
  • While the IMF has welcomed China’s recent property market reforms, it also wants to see policies that fuel an increase in consumer spending

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UPDATED: 30 May 2024, 8:04 am

The International Monetary Fund (IMF) now believes China’s economy will grow by 5 percent this year – up from an earlier forecast of 4.6 percent, reports CNBC.

Announced on Wednesday, the 0.4 percent hike was due to the economy’s “strong” first quarter performance and followed a visit by IMF assessors. Gross domestic product (GDP) grew by a better-than-expected 5.3 percent during the first three months of the year.

However, slower growth is expected to follow. The IMF has forecast 4.5 percent growth for 2025, and just 3.3 percent growth in 2029 – attributed to an ageing population and sluggish productivity.

[See more: China is taking ‘historic’ measures to shore up its property sector]

According to the IMF, China’s troubled property sector remained a major hurdle to full economic revival in the wake of the Covid-19 pandemic.

Earlier this month, the government announced an unprecedented suite of policy changes designed to bolster the property market – which has been in decline since 2021, when a number of major developers defaulted on repayments to investors. 

The IMF’s first deputy managing director Gita Gopinath said the revision was “welcome,” but also called for more comprehensive action.

[See more: Leading economist predicts a rocky road for China’s economy]

“The priority should be to mobilise 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.

Gopinath also urged the government to implement near-term macroeconomic policies geared towards supporting domestic demand, which has remained low even as industrial activity has increased in recent months.

China has set itself the goal of increasing its GDP by 5 percent in 2024. While the country seems set to meet that target, 5 percent remains far below the over 10 percent growth that its economy enjoyed for over 30 years after opening up in the late 1970s.

UPDATED: 30 May 2024, 8:04 am

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