China: IMF expects a gradual rebound in the economy

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Preliminary findings published earlier this week by the International Monetary Fund (IMF) showed that China’s economy is expected to grow 3.2% in 2022, then rise 4.4% in the next two yearsas the country’s growth remains under pressure after an “impressive” recovery from the initial shock of the pandemic.

Gita Gopinath, IMF First Deputy Managing Director, said: “With the ‘zero-covid’ strategy, China has weathered the initial shock of the pandemic well, allowing the economy to recover quickly from the lockdowns of early 2020 and significantly expand the global supply of medical products and durable goods at a critical time for the global economy.”

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“However, China’s growth has slowed since then and remains under pressure amid recurring covid outbreaks, deepening challenges in the real estate sector and slowing global demand.”

The tightening of regulations in the real estate sectoralthough well-intentioned to curb high leverage, has exacerbated severe financial strains on developers, leading to a rapid slowdown in home sales and investmentalong with a sharp decline in revenue from local government land sales.”

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“In this background, a growth of 3.2% is projected for 2022, which will increase to 4.4% in 2023 and 2024under the assumption that the current zero-covid strategy will be lifted gradually and safely in the second half of 2023.”

Source: Fx Street

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