The IMF raises China’s growth forecast on strong first quarter and policy measures

BEIJING – The International Monetary Fund on Wednesday raised its forecast for Chinese growth this year to 5%. from 4.6% previously, due to ‘strong’ first quarter figures and recent policy measures.

The upgrade followed an IMF visit to China for a regular review. The organization now expects the Chinese economy to grow by 4.5% in 2025, up from the previous forecast of 4.1%.

But by 2029, they expect China’s growth to slow to 3.3% due to an aging population and slower productivity growth. That is less than the IMF’s previous forecast of 3.5% growth in the medium term.

China’s economy grew by a better-than-expected 5.3% in the first quarter, supported by strong exports. April data showed consumer spending remained sluggish while industrial activity picked up.

About two weeks ago, Chinese authorities announced sweeping measures to support the struggling real estate sector, including lifting the floor on mortgage rates.

The policy steps are “welcome” but more comprehensive action is needed, Gita Gopinath, the IMF’s first deputy managing director, said in a statement.

“The priority should be to mobilize central government resources to protect buyers of pre-sold, unfinished homes and accelerate the completion of unfinished, pre-sold homes, paving the way for resolving insolvent developers,” she said.

“Allowing greater price flexibility, while monitoring and limiting potential macro-financial spillovers, could further stimulate housing demand and help restore balance.”

The IMF press release said that during her visit to China this month, Gopinath met with People’s Bank of China Governor Pan Gongsheng, Vice Minister of the Ministry of Finance Liao Min, Vice Minister of the Ministry of Trade Wang Shouwen, vice governor of the PBOC Xuan Changneng and the National Financial Regulatory Administration. Vice Chairman Xiao Yuanqi.

“Near-term macroeconomic policies should aim to support domestic demand and limit downside risks,” Gopinath said.

“Achieving high-quality growth will require structural reforms to counter headwinds and address underlying imbalances,” she added.

During a meeting on Monday, Chinese President Xi Jinping emphasized the need for this promoting ‘high-quality, sufficient employment’, according to state media.

“Xi specifically emphasized improving employment policies for graduates and other young people,” Xinhua reported.