Economic growth in China will slow down in the coming years, weighed down mainly by the uncertainty related to the crisis in the real estate sector and by the international context, the International Monetary Fund (IMF) predicted on Friday.
The country’s Gross Domestic Product (GDP) will stand at 4.6% this year, following the upward revision at the beginning of the week of its previous forecast of 4.2%. And it will evolve to 3.5% by 2028, he noted in his report focused on the situation in China.
The real estate sector and exports are the pillars of the growth of the world’s second largest economy and employ millions of people.
But the financial problems of some of its most important real estate developers (Evergrande, Country Garden…) raise distrust among buyers, which has an impact on the activities of hundreds of thousands of subcontracting companies.
Chinese exports fell in 2023 for the first time in seven years, due to geopolitical tensions and stagnant global demand.
“The real estate sector is in the midst of a multi-year transition to become smaller and more sustainable (…) and we are only at the beginning“, said the head of the IMF for China, Sonali Jain-Chandra, before the press.
This trend will persist in 2024, he added.
In recent months, the government has multiplied measures to support the sector, but without bearing fruit for now. “There’s still much to do”considered Jain-Chandra.
“It is clear that the (financial) difficulties of developers and unfinished construction projects generate credit risks”warned Thomas Helbling, of the IMF’s Asia-Pacific department.
Last year, China registered one of the lowest growth in the last three decades (5.2%), according to official figures.
Source: Gestion
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