IMF: China should grow 4.8% in 2022, with loss of breath in economic recovery

The International Monetary Fund (IMF) projects that the Chinese Gross Domestic Product (GDP) will have grown 7.9% in 2021 and that it will advance 4.8% in 2022.

“China’s recovery is well advanced, but it is off balance and momentum has slowed,” the fund says, attributing the slowdown to the rapid withdrawal of political support, the still incomplete recovery in consumption amid Covid-19 outbreaks, and to lower investment in the real estate sector, amid political efforts to reduce leverage in this area.

The assessment is in a statement from the IMF to mark the end of the consultations carried out by the fund’s team on the situation in China, under Article IV of the institution’s bylaws.

The IMF also says that the country’s core consumer price index (CPI) should remain contained and below the target of around 3%.

The current account surplus is expected to decline in 2022, to 1.5% of GDP (from 1.8% in 2021), as demand for pandemic-related exports normalizes.

The IMF says there has been a “significant tightening” of macroeconomic policy in the country, contributing to the loss of steam in growth, with a shift in focus from supporting recovery to deleveraging.

In monetary policy, there was a moderate tightening compared to 2020, he assesses, considering that structural reforms are advancing “irregularly among the main areas”.

The IMF communication brings an assessment of its executive board. For him, the Chinese recovery is well advanced thanks to “strong and fast” actions taken by the authorities, including the high vaccination rate against covid-19.

Faced with the loss of momentum and the still unbalanced and risky recovery, the IMF suggests adopting “appropriate policies that support the economy”, as well as advancing structural reforms to aim for “high quality growth – balanced, inclusive and sustainable”. green”.