(Beijing) China’s expected recovery this year is expected to contribute a quarter of global growth, but uncertainty over COVID-19 and the real estate sector could dampen that momentum, the IMF said on Friday.
After three years of draconian measures, the Asian giant lifted most of its health restrictions against the epidemic in December, which were weakening the economy and causing growing discontent among the population.
The activity initially struggled to revive due to an explosion in the number of patients. But the continued decline in the number of patients is now promoting recovery.
The lifting of restrictions in China will give “a boost” to the world economy, underlines Friday the International Monetary Fund (IMF).
The institution raised its growth forecast for the world’s second largest economy on Monday and expects China’s gross domestic product (GDP) to rise by 5.2% this year.
Domestic consumption is set to play a key role.
“The Chinese economy should contribute this year to a quarter of global growth,” says the IMF, in a report on the economy in China.
The Fund, however, warns against the “high degree of uncertainty” which remains on the epidemic level “in a context of still insufficient immunity of the population”.
In this context, Chinese growth “remains under pressure” in the face of the risk of the emergence of new variants of COVID-19, which could slow down the recovery.
In addition, the country is facing “significant economic challenges”, such as the real estate crisis which “is still not resolved”, notes the IMF.
This sector, which weighs more than a quarter of China’s GDP and had played a key role in the post-pandemic recovery in 2020, has since been weakened.
Many developers are struggling to survive after Beijing tightened credit conditions, while real estate sales are down.
Slowing global demand, uncertainties from the war in Ukraine and geopolitical tensions are the “main risks” to Chinese growth this year, the IMF warns.
In 2022, China saw its GDP grow by 3%.
This pace, which would make many the envy of most major economies, is nonetheless one of the lowest in 40 years for the Asian giant.