Despite China’s stimulus, IMF lowers GDP forecast on property, consumer confidence

China’s economy is projected to grow by 4.8 per cent this year, the International Monetary Fund said in its World Economic Outlook

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Last week, China said its economy grew by 4.6 per cent in the third quarter compared to a year earlier. Photo: TNS

Published: 9:00pm, 22 Oct 2024

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.

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

IMF

Property issues surfaced with new regulations in 2020 followed by a series of defaults among real estate developers and a decline in home prices.