IMF projects growth of 3.2% in China’s GDP in 2022 and 4.4% in 2023

China’s GDP growth is projected at 3.2% for 2022, improving to 4.4% in 2023 and 2024, according to the most recent study by the International Monetary Fund (IMF).

The report points out that, after the impressive recovery from the initial impact of the pandemic, Chinese growth has slowed and remains under pressure. In the short term, a change in the “Covid Zero” strategy, including an acceleration in vaccination, and other actions to end the crisis in the real estate sector, would support growth, points out the Fund.

“Although the Covid Zero strategy has become more agile over time, the combination of more contagious Covid-19 variants and persistent gaps in vaccination have led to the need for more frequent lockdowns, weighing on consumption and private investment, including in housing. ”, points out IMF Deputy Director Gita Gopinath.

“Regulatory tightening in the real estate sector, while well-intentioned to curb high leverage, has added to severe financial strains for developers, leading to a rapid slowdown in real estate sales and investment, along with a sharp decline in government land sales revenues. local government”, adds the director.

In 2023, following the support provided this year, fiscal policy should protect the recovery and facilitate rebalancing in China, assesses the IMF. “A neutral fiscal policy stance geared towards supporting households will help rebalance towards consumption and drive growth more effectively. Monetary policy should remain accommodative and be based more on measures based on the interest rate”, says the organization.

In the longer term, rising geopolitical tensions pose risks of fragmentation through financial decoupling pressures and limits on trade, foreign direct investment and knowledge exchange around technology, the Fund assesses.