Flagging consumer confidence and domestic property issues are set to weigh on China’s economy for the remainder of the year, according to the International Monetary Fund (IMF), prompting the Washington-based financial agency to lower its 2024 economic growth forecast.
Advertisement
China’s economy would grow by 4.8 per cent this year, down from its previous projection of 5 per cent in July, the IMF said in its “World Economic Outlook” on Tuesday.
The projection, although in line with Beijing’s official “around 5 per cent” target, accentuates the festering sore spots in the world’s second-largest economy despite the roll-out of stimulus measures since late September.
“Conditions for the real estate market could worsen, with further price corrections taking place amid a contraction in sales and investment.”
The outlook did acknowledge Beijing’s economic stimulus launched from late last month, a process that has included rate cuts, debt relief efforts and 2 trillion yuan (US$281 billion) in government bond issuance.
This could cause domestic demand to falter, with negative spillovers to both advanced and emerging market economies given China’s rising footprint in global trade
Property issues surfaced with new regulations in 2020 followed by a series of defaults among real estate developers and a decline in home prices.