China’s economy is set to grow 5.4% this year, having made a “strong” post-COVID recovery, the International Monetary Fund (IMF) said on Tuesday (November 7), making an upward revision to its earlier forecast of 5% growth, while expecting slower growth next year.
Reading a statement in Beijing, IMF’s First Deputy Managing Director Gita Gopinath also said continued weakness in the property sector and subdued external demand could restrict gross domestic product growth to 4.6% in 2024, which was still better than the 4.2% forecast contained in its World Economic Outlook (WEO), published in October.
The upward revision followed a decision by China to approve a 1 trillion yuan ($137 billion) sovereign bond issue and allow local governments to frontload part of their 2024 bond quotas, in a move to support the economy.
The combination of the downturn in the property sector and local government debt crunch could wipe out much of China’s long-term growth potential, economists say. Local debt has reached 92 trillion yuan ($12.6 trillion), or 76% of China’s economic output in 2022, up from 62.2% in 2019.
(Reuters)