The International Monetary Fund (IMF) has made adjustments to its growth predictions for China, indicating a slowdown in the country’s recovery, which it attributes to the weakness in its property sector. In its regional economic outlook report, released on Wednesday, the IMF has downgraded China’s growth projections for 2023 and 2024. The second-largest economy in the world is now projected to grow by 5 percent this year and 4.2 percent next year, down from the IMF’s previous forecast in April of 5.2 percent and 4.5 percent, respectively.
The IMF’s report highlights that China’s recovery has been losing momentum, with the manufacturing purchasing managers’ indexes entering a contraction phase between April and August. Meanwhile, conditions in the real estate sector continue to deteriorate, which has contributed to the downward revisions in the growth forecasts.
The report also raises concerns about China’s property market, stating that a prolonged correction in the housing market could lead to greater financial stress among property developers and more significant asset quality deterioration in the near term. This, in turn, could potentially lead to a decline in China’s gross domestic product (GDP) of up to 1.6 percent relative to the baseline by 2025. This would also have a global impact, with a decline of 0.6 percent in the global GDP relative to the baseline.
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