IMF Raises China Growth Forecast to 5.4% for 2023
The International Monetary Fund (IMF) has raised its China growth forecast to 5.4% for 2023, citing better-than-expected third-quarter growth and Beijing’s recent policy announcements. This comes after the IMF had previously lowered its growth forecast for China in October.
Despite the positive outlook for 2023, the IMF still expects China’s growth to slow next year to 4.6% due to “continuing weakness in the property market and subdued external demand.” The property market has been a concern for policymakers, prompting Beijing to announce further support for the struggling sector. Additionally, the Chinese government has taken the rare decision to increase the budget deficit in an effort to stimulate economic growth.
During their visit to China from October 26 to November 7, IMF representatives, including First Deputy Managing Director Gita Gopinath, met with key financial and economic officials. These included the People’s Bank of China Governor Pan Gongsheng, China Securities Regulatory Commission Chairman Yi Huiman, and National Bureau of Statistics Commissioner Kang Yi.
In a statement, Gopinath acknowledged the Chinese authorities’ efforts to address risks in the property market and control macrofinancial instability. She also welcomed the medium-term priorities announced at the Central Financial Work Conference, which highlighted risks from the property sector, local government debt, and small and medium banks.
However, Gopinath emphasized the need to minimize economic costs and contain risks associated with these measures. She highlighted the importance of financial stability, pointing out that financial institutions currently face lower capital buffers and growing asset quality risks.
The IMF’s growth forecast for China for 2023 reflects the country’s resilience and the measures taken to address economic challenges. Nevertheless, continued efforts are needed to ensure sustained growth and minimize risks in the future.