MF Chief Urges Swift Reforms as China Faces Potential Threat to Economic Growth


In 2023, China’s economic expansion faced hurdles with a slow pace, attributed to challenges in the real estate sector and a decline in export performance. Analysts anticipate a growth rate of approximately 5 percent for the year.

Kristalina Georgieva, Head of the International Monetary Fund

Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has issued a warning, emphasizing the imperative for China to implement structural reforms to avert a considerable downturn in growth rates.

Speaking with CNBC at the World Economic Forum (WEF) in Davos, Georgieva highlighted both short and long-term challenges confronting China. In the short term, she pointed to the need for addressing issues in the property sector and addressing a high level of local government debt. Meanwhile, in the long term, demographic changes and a perceived “loss of confidence” pose challenges to the world’s second-largest economy.

Georgieva stressed the necessity of structural reforms, advocating for the continued opening up of the economy and a shift in the growth model toward increased domestic consumption. This, she explained, would foster confidence among the population, encouraging them to spend more rather than saving. Georgieva concluded by emphasizing that these structural reforms are crucial for China to mitigate the predicted decline in growth rates, which could otherwise fall below 4 percent in the absence of such reforms.

In 2023, China encountered a tepid economic expansion, hindered by challenges in the real estate sector and a downturn in exports. Analysts anticipate that the economy likely expanded by approximately 5 percent during the same period.

Notably, the International Monetary Fund (IMF) revised its China growth forecast in November to 5.4 percent for 2023, attributing it to certain policy adjustments by Beijing. Nevertheless, the Washington, DC-based institution expressed concerns about a projected deceleration in growth to 4.6 percent in 2024, cautioning against persistent struggles in the real estate market.

DATA SOURCE : Moneycontrol

Leave a Reply

Your email address will not be published. Required fields are marked *