The IMF anticipates a constant decrease until it reaches 3.5% by 2028, as detailed in its report focused on China’s economic situation.
The International Monetary Fund (IMF) issued a discouraging forecast for the economy of China, as it suggests a sustained slowdown in that country for several years. Economic growth in the Asian giant will face challenges in the coming years, mainly due to the uncertainty derived from the crisis. in the real estate sector and international dynamicsaccording to the projections made this Friday by the organization in charge of Kristalina Georgieva.
The country’s Gross Domestic Product (GDP) is expected to reach 4.6% this year, after an upward revision earlier in the week from the previous forecast of 4.2%. However, the IMF anticipates a constant decrease until reaching 3.5% by 2028, as detailed in its report focused on China’s economic situation.
China: what is behind the crisis
The real estate sector and exports, which are fundamental for the growth of the world’s second largest economy and provide employment to millions of people, are affected by the financial problems of major real estate developers such as Evergrande and Country Garden. These problems generate distrust among buyers and have repercussions on the activities of many subcontracting companies.
Chinese exports saw a drop in 2023, marking the first time in seven years, hit by geopolitical tensions and stagnant global demand.
Sonali Jain-Chandra, head of China at the IMF, said at a press conference that “The real estate sector is in the midst of a multi-year transition to become smaller and more sustainable.“, indicating that this process is in its initial stages and is expected to continue in 2024.
Despite measures implemented by the government in recent months to support the sector, results so far have been limited. Jain-Chandra expressed that “There’s still much to do” to stabilize the situation.
Thomas Helbling of the IMF’s Asia-Pacific department warned of credit risks arising from developers’ financial difficulties and numerous unfinished construction projects.
Last year, China experienced some of the lowest growth in the last three decades, recording 5.2% according to official figures.
Source: Ambito
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