Investing.com | Editor Pollock Mondal
Published October 12, 2023 at 3:09am ET
The International Monetary Fund (IMF) has cut its economic growth forecast for China in 2023 and 2024, citing a slowdown in the real estate sector and declining consumer confidence. The IMF recommended that China shift from an investment-driven model to a consumption-driven growth model to combat economic stagnation.
As the IMF’s Krishna Srinivasan points out, demand remains weak despite efforts to move towards consumption-led growth. Trust issues in the real estate sector are further inhibiting this change. The IMF has revised down its growth forecast for China’s economy to 5% in 2023 and 4.2% in 2024, emphasizing that China’s slowing growth poses significant risks to the global economy.
Economists at Maybank expect China’s recovery to slow further, forecasting growth to be 4.8% this year. This comes as “revenge spending” fades, signs of fatigue became evident during China’s “Golden Week” holiday, and consumer spending remains weak compared to pre-pandemic levels.
In contrast to China’s economic weakness, the IMF expects India’s economy to grow by 6.3% in 2023 due to pent-up demand and positive sentiment. However, these forecasts are also affected by the impact of the pandemic and structural changes due to aging.
Globally, growth is expected to slow from 3.5% in 2022 to 3% in 2023. The IMF has warned that China’s slowing growth is a “major risk to the global economy”.
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Written by: Investing.com