IMF: China’s Reopening Driving Asia-Pacific Economic Growth, Says Report

03.05.2023

The International Monetary Fund released a report on May 2, predicting that the economic growth in the Asia-Pacific region will reach 4.6% this year. The report specifically mentions the reopening of China, and the resulting surge in consumption is driving regional growth.

(Deutsche Welle Chinese website) The International Monetary Fund predicts that the Asian economy will grow by 4.6% this year, compared to 3.8% last year. As a result, Asia’s economic growth is expected to account for 70% of the world’s growth this year. The IMF’s latest growth forecast was revised up by 0.3% from last October.

According to Reuters, the International Monetary Fund wrote in its May regional economic outlook report: “The Asia-Pacific region will become the most active region in the world economy in 2023, and its main driving force comes from China and China.Indian economy。”

China’s economy is expected to grow by 5.2 percent and India’s by 5.9 percent. Other countries in Asia are also expected to bottom out.

According to a CNBC report in the United States, the International Monetary Fund reported that China and India, the two largest emerging market economies in Asia, are expected to account for half of the world’s growth this year, while the rest of the Asia-Pacific countries will contribute another 20% to global growth.

China’s real estate market still faces long-term challenges

Global growth is slowing due to high interest rates and Russia’s war in Ukraine, the IMF report wrote. But domestic demand in Asia has so far remained strong. Among them, China’s growth engine usually comes from investment, but this time consumer demand will become the main driver.

In the first quarter of this year, China’s economy grew at its fastest pace in a year.However, April data showed that the economic recovery may have weakened, especially in the manufacturing sector。

Krishna Srinivasan, the IMF’s regional director for Asia and the Pacific, cautioned against reading too much into weekly or monthly data, Bloomberg reported. He said that China’s economic vitality is quite strong,But policymakers still have to face long-term challenges, especially in the housing market.

Thomas Helbling, deputy director of the International Monetary Fund’s Asia-Pacific region, said that China’s support for real estate developers has benefited large real estate developers, while smaller developers still need support.

China needs to prioritize structural reforms

Meanwhile, the IMF cut its growth forecast for Asia next year by 0.2% to 4.4%. The group warned of persistent inflation, the risk of slowing global demand and the impact of problems in the U.S. and European banking sectors.

The report of the International Monetary Fund also mentioned that in the long run, the Chinese economy, which has been the engine of regional and global growth for decades, is expected to slow down significantly due to the unfavorable development of the demographic structure and the slowdown of productivity growth. The report recommends that the region should prioritize structural reforms to drive long-term growth, including through innovation and digitalization and accelerating the green energy transition.

(comprehensive report)

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