In an update to its World Economic Outlook report, the IMF projects China's economy will grow 5.2% in 2023, driven by a rebound in private consumption. Helbling highlights three sources of economic resilience in China: high household savings, government space to adjust policies, and an economy operating below its potential.
IMF Projections for China & Global Growth
China's stronger rebound will be felt globally, particularly in services, tourism, and aviation, says Helbling. He adds that the rebound will have positive spillover effects for Asia, including some commodity exporters and countries involved in consumer goods. In the long run, China's rebound will help rebalance its economy in line with its long-term goals. The IMF suggests avoiding prematurely tightening macroeconomic policies and reaccelerating key structural reforms to lift potential growth.
IMF's Advice for China's Future Growth
The IMF suggests supporting innovation will be key to China's future growth. As China passes the middle-income level, growth sources need to move from extensive growth based on investment and labor force growth to innovation and productivity. Helbling adds that reaccelerating key structural reforms and supporting innovation will be important for increasing medium-term growth potential.