Over the medium term, growth is projected to gradually decline to about 3.3 per cent in 2029 amid headwinds from weak productivity and an aging population, IMF said after its executive board recently concluded the 2024 Article IV consultation with China.

Uncertainty surrounding the outlook is high. Deeper-than-expected contraction in the property sector, combined with high debt levels, could result in sustained disinflationary pressures and adverse macro-financial feedback loops, it noted in a release.

External risks include greater-than-expected weakening of external demand and an escalation of fragmentation pressures.

The country’s economy has remained resilient despite the continued weakness in the property sector, with its GDP growing by 5.2 per cent last year, and by 5 per cent year on year (YoY) in the first half (H1) this year.

Growth has been primarily driven by strong public investment and the post-COVID recovery in private consumption, with net exports also providing a boost more recently. However, inflation has been low in recent quarters amid continued economic slack.

On the upside, decisive policy action to facilitate adjustment in the property sector or market-oriented structural reforms could boost confidence and lead to a better-than-expected economic outcomes, the IMF added.

Fibre2Fashion News Desk (DS)