The International Monetary Fund (IMF) has revised its forecast for China's economic growth this year to 4.5%. The adjustment comes as the country continues to face a real estate slump and weak consumer spending, indicating that strong export performance alone cannot offset domestic economic challenges.
In its latest World Economic Outlook (WEO) report released on October 12, the IMF lowered its growth forecast from 4.6% in July by 0.1 percentage points, aligning with the lower end of the Chinese government's growth target of 4.5% to 5.0% for the year. The IMF also reduced its forecast for China's economic growth next year from 4.1% to 4.0%.
The report stated, “The ongoing real estate slump has led to weak consumption and investment, and the strong export performance has not been sufficient to counterbalance this.” It also projected that rising global oil prices, prolonged uncertainties, and structural factors would continue to weigh on the economy. However, the IMF noted that government policy support is expected to prevent a sharp economic slowdown.
China's economy is currently grappling with prolonged domestic weakness, a persistent real estate downturn, and external uncertainties. In the second quarter of this year, the economic growth rate was 4.3%, falling short of market expectations and marking the lowest level since late 2022.
Amid these challenges, exports have become a crucial driver supporting the Chinese economy. In August, exports surged to $401.44 billion, a 25% increase compared to the same month last year. The cumulative trade surplus for the first eight months of this year reached $805.51 billion, up about 3% from the same period last year.
The IMF also projected that China's trade surplus, which hit a record high of $1.2 trillion last year, could expand further this year. However, it pointed out that the increase in exports has not sufficiently translated into improvements in household income and employment, leading to a sluggish domestic recovery.
China is set to announce its third-quarter economic growth rate on October 19. A survey conducted by Japan's Nikkei newspaper among 22 economists predicts an average growth rate of 4.4% for the third quarter, which is 0.1 percentage points higher than the second quarter's growth rate of 4.3%, but still below the government's target range of 4.5% to 5.0% for two consecutive quarters.
Analysts from global investment bank JP Morgan stated in a report earlier this month that to alleviate weak consumption, the Chinese government needs to introduce additional stimulus measures, such as increasing infrastructure investment.
* This article has been translated by AI.
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