THE International Monetary Fund (IMF) today raised its 2023 economic growth forecast for China, citing stronger consumption and recent policy measures announced by Beijing.

After a tough year for the world’s number two economy, there have been flickers of life in recent weeks, with third-quarter expansion coming in more than expected.

IMF said it saw GDP expanding 5.4% this year, compared with a previous estimate of 5%, while it lifted its outlook 2024 to 4.6% from 4.2%.

IMF first deputy managing director Gita Gopinath told a news conference in Beijing today that the upgrade reflected “a strong post-reopening rebound in domestic demand, particularly consumption”.

The economy grew 4.9% in July-September, slower than the previous quarter but a lot better than expected and a little shy of the government’s goal of “around 5%” for the year – one of its lowest targets in years.

China’s economy expanded just 3% last year – well below the official target of 5.5% – as it was choked by draconian Covid-19 measures.

A string of below-par economic data in the first half – which came despite the lifting of zero-Covid curbs at the end of 2022 – led the government to unveil a number of targeted stimulus measures aimed at supporting key sectors, particularly the troubled property industry.

And last month, Beijing said it would issue C¥1 trillion (RM638 billion) of sovereign bonds to boost infrastructure spending.

Gopinath said the new forecast were made “reflecting stronger than expected growth in the third quarter and the new policy support that was recently announced”.

But she warned that IMF expected “weakness in the property sector to continue, and external demand to remain subdued”.

The country’s key real estate sector generally accounts for around a quarter of GDP, but the industry has lurched from one crisis to another in recent years, with major firms crippled by mountains of debt. – AFP, November 7, 2023.