China’s economy faces ‘high uncertainty’ in 2024 as IMF predicts 4.6% growth, calls for greater data transparency

Name: A vanishing fairyland dream: how China Evergrande rose, then crashed
Uploaded: 2024-02-02T09:01:42.000Z
Duration: 8 min 36 s
Description: A vanishing fairyland dream: how China Evergrande rose, then crashed

International Monetary Fund (IMF) expects China’s economy to grow by 4.6 per cent in 2024, it said as it released a review of its Article IV consultation

Washington-based institution highlighted ‘significant’ gaps in China’s economic and financial data, underlined by a six-month suspension of its youth unemployment data

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China’s recovery from the coronavirus pandemic has been patchy, weighed by a prolonged real estate market downturn, a local government debt crisis, weak demand and heightened geopolitical tensions. Photo: Xinhua

Amanda Lee

Published: 5:01pm, 2 Feb 2024Updated: 5:45pm, 2 Feb 2024

Uncertainty surrounding China’s economy remains high this year, dragged down by the ongoing property market slump, the International Monetary Fund (IMF) said on Friday, while the Washington-based institution also urged Beijing to address gaps in its economic and financial data.

The IMF expects China’s gross domestic product (GDP) to grow by 4.6 per cent this year, before slowing to 4 per cent in 2025, as a result of ongoing property sector strains, which would further dampen private demand and confidence, and also add to local government budget strains.

“Uncertainty surrounding the outlook is high, particularly given the existing large imbalances and associated vulnerabilities,” the IMF said.

“Staff estimate that, in such an adverse scenario which entails a deeper and more prolonged contraction in the property sector, GDP in 2025 could be 1.8 per cent lower compared to the baseline [of 4 per cent].”

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A vanishing fairyland dream: how China Evergrande rose, then crashed

Last year, China’s economy grew by a higher-than-expected 5.2 per cent, and Beijing is again expected to set a GDP growth target of around 5 per cent for 2024.

The outlook was included in the IMF’s review of its Article IV consultation, which took place in China over a month in October and November last year. Its Article IV Mission sends economists to member countries to monitor economic and financial policies and provide recommendations.

China’s recovery from the coronavirus pandemic has been patchy, weighed down by a prolonged real estate market downturn, a local government debt crisis, weak demand and heightened geopolitical tensions.

The IMF said further shocks to growth and earnings amid high debt levels in the property sector and within some local governments could bring about broader balance sheet stress and weaker lending capacity, including at smaller local financial institutions.