IMF says China’s financial progress of 5% in 2024 was ‘optimistic shock’

By Andrea Shalal

WASHINGTON (Reuters) – China notified the Worldwide Financial Fund on Thursday that its financial system grew by 5% in 2024, IMF Chief Economist Pierre-Olivier Gourinchas advised reporters, calling the event a “optimistic shock” in comparison with the IMF’s forecast of 4.8%.

Gourinchas mentioned the IMF had elevated its forecast for Chinese language progress barely to 4.6% for 2025 and by four-tenths of a share level to 4.5% for 2026, reflecting some elevated momentum attributable to fiscal measures, though that was offset by commerce coverage uncertainty.

However he harassed that China, the world’s second-largest financial system, nonetheless wanted to make home demand a much bigger engine of its progress, a message lengthy delivered by the IMF to Chinese language authorities, however that had not occurred but.

“The Chinese language financial system must pivot to a extra domestically-driven engine of progress,” Gourinchas mentioned throughout a web-based information convention on Friday, including that it could change into more and more troublesome for the Chinese language financial system to increase by exterior commerce alone.

“China is a really giant financial system, and it can’t simply depend on the remainder of the world to gas its personal home progress,” he mentioned, including that Chinese language authorities had adopted some measures to maneuver in that route, however extra work was wanted.

Any weak point within the Chinese language financial system would have spillover results for a lot of rising and creating nations, posing a threat issue for the worldwide financial system, he mentioned.

The IMF forecast Chinese language progress would stabilize at 4.5% in 2026 as commerce uncertainty dissipated and better retirement ages slowed the decline within the nation’s labor provide.

China’s high legislative physique in September authorized plans to boost the retirement age for males to 63 from 60, and to 58 from 55 for girls in white-collar work. For ladies in blue-collar jobs it elevated to 55 from 50.