In a report dated October 22, the International Monetary Fund (IMF) lowered China’s economic growth forecast to 4.8% for 2024, down 0.2 percentage points from the previous forecast. in July. The IMF also forecasts that China’s economic growth will continue to slow down, at 4.5% in 2025.
The IMF report highlights the worrying contraction of China’s real estate industry, which is considered one of the major risks to the global economic outlook. The IMF warned that without measures to resolve the crisis, China’s real estate market could continue to deteriorate, with sales and investment both falling, causing a decline in consumer confidence and affecting negative impact on domestic demand.
The IMF also recalled past real estate crises, such as in Japan in the 1990s and the US in 2008, to clarify the risks China faces if the situation does not soon stabilize.
In recent months, China has announced many stimulus measures to boost economic growth. In September, the People’s Bank of China (PBoC) reduced banks’ required reserve ratios to support liquidity. At the same time, China’s leaders have pledged to stem the decline in the real estate sector and encourage a market recovery. Some major cities such as Guangzhou and Shanghai have announced measures to boost homebuyer confidence.
China’s Finance Minister, Lam Phat An, also said there would be further stimulus measures and policy adjustments to debt and deficits. China’s Ministry of Housing has announced the expansion of the “white list” of real estate projects and the promotion of loans for unfinished projects.
However, IMF economist Pierre-Olivier Gourinchas said that although these measures are in the right direction, they are still not enough to change growth forecasts. He also noted that the recent measures are still being evaluated and have not been factored into the current forecast.