He International Monetary Fund (IMF) warned this Friday China continue to relax your monetary politics after reviewing its growth prospects for the Asian giant, which confirm the slowdown from 2024.
In a press conference, those responsible for the organization for the region detailed that their growth forecast for next year rose to 5.2% -the same as that of 2022, up to 3%-, mainly driven by the recovery of the private consumption after the reopening of the country by leaving behind the “zero covid” policies.
“This growth forecast is subject to considerable uncertainty,” warned, however, the deputy director of the IMF’s Asia-Pacific department, Thomas Helblingin the meeting.
This uncertainty is mainly due to the possibility of future waves of covid-19 infections, and the unexpected slowdown in the real estate market in the country.
In addition, Helbling pointed out, the Chinese reopening could lead to increased inflation riskswhich continue to be low for the world’s second largest economy.
All in all, the agency estimates that China’s growth in 2023 will contribute a quarter to world growth, and that it will have a particularly positive effect on countries in the region such as Thailand or Philippinesdue to the increase in tourism.
Starting in 2024, however, experts forecast a steady slowdown in the Asian economy, which will grow below 3% from 2026.
A NEUTRAL FISCAL POLICY
Despite the good prospects for 2023, the agency expects China to continue in 2023 with a negative output gap -when the GDP real is less than potential-, therefore they encourage the country’s authorities not to tighten macroeconomic policies too soon.
In this sense, they recommended maintaining a neutral fiscal policy focused especially on households, and continuing to relax monetary policy, since inflationary pressures are, for the moment, very low, and the Chinese economy is operating below its potential.
The experts also referred to the restrictions on the purchase of semiconductors imposed by USA to try to prevent the Asian giant from developing Artificial Intelligence or next-generation quantum computing projects.
Helbling warned about the risks of contributing to geo-economic fragmentation, which could lead the affected countries to suffer considerable losses in their GDP.
“Because of these risks, we have emphasized that large economies should work together,” said the researcher, emphasizing the danger posed to the world by fragmenting supply chains.
(With information from EFE)
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