BEIJING: China’s economy is expected to contribute a quarter of global growth this year, the International Monetary Fund said Friday, although uncertainty around Covid-19 and the property sector could stifle momentum.
After almost three years of stringent health restrictions, Beijing in December abruptly ended the zero-Covid policy that had battered the economy and provoked widespread protests.
The Asian giant posted growth of just three percent in 2022, hammered by stringent lockdowns and a deepening crisis in the key property sector.
“China’s economy is set to rebound this year as mobility and activity pick up after the lifting of pandemic restrictions, providing a boost to the global economy,” the IMF said in an annual assessment of the Chinese economy.
“That’s good news for China and the world as the Chinese economy is now expected to contribute a quarter of global growth this year,” it said.
The IMF on Monday revised its 2023 growth forecast for China up to 5.2 percent, after upgrading its global growth forecast partially based on the country’s reopening.
China’s economy grows at slowest pace in decades but tops forecasts
Authorities in China have said the soaring virus case numbers that accompanied the reopening have now passed their peak, with a travel surge prompted by the biggest Lunar New Year holiday in years offering a much-needed boost to business.
However, Friday’s assessment also warned of “significant economic challenges” ahead.
“The contraction in real estate remains a major headwind, and there is still some uncertainty around the evolution of the virus,” it said.
The property sector, which along with construction accounts for more than a quarter of China’s GDP, has been hit hard since Beijing started cracking down on excessive borrowing and rampant speculation in 2020.
“Longer-term, headwinds to growth include a shrinking population and slowing productivity growth,” the IMF said.
China’s population shrank last year for the first time in more than six decades, official data released last month showed, and the nation of 1.4 billion has seen birth rates plunge to record lows as its workforce ages.
The slowdown in global demand, the uncertainties of the war in Ukraine and geopolitical tensions are the “main risks” to Chinese growth this year, the IMF said.