China is a driving global economy, IMF says

China is set to remain the largest contributor to global growth this year and next, despite recent economic challenges from the real estate industry, according to the International Monetary Fund (IMF).

Although the IMF’s GDP growth prediction for China has been lowered downward, the nation is likely to contribute around one-third of global growth this year and next, according to Steven Barnett, senior resident representative of the IMF in China.

According to the IMF’s World Economic Outlook released in October, global economic production is predicted to increase by 3% this year, with China contributing 0.9%, according to Barnett.

In comparison, the United States is expected to provide 0.3 percentage points, while India may give 0.5 percentage points, according to Barnett on the sidelines of the event.

“China is expected to contribute 0.8 percentage point of the global growth of 2.9 percent in 2024, a little under one-third but still greater than the US’s 0.2 percentage point and India’s 0.5 percentage point,” Barnett said.

The WEO report, released on Tuesday, reduced China’s 2023 economic growth prediction to 5% from 5.2 percent, citing pressures from the real estate sector’s deterioration.

The country’s real estate market has lately experienced favorable adjustments, according to Zou Lan, chairman of the People’s Bank of China’s monetary policy department, with rising housing market transaction activity in major cities and slight increases in house sales and market expectations.

According to Zou, real estate development loans and personal mortgages provided by major banks grew by more than 100 billion yuan ($13.68 billion) in September compared to August.

Zou also stated that the central bank’s efforts to decrease the interest burden of current mortgages have made quick headway, with 49.73 million mortgages—representing 98.5% of those eligible for interest rate reductions and totaling 21.7 trillion yuan—having interest rates reduced during the week beginning September 25.

According to Zou, the weighted average interest rate on those mortgages fell by 0.73 percentage points on average to 4.27 percent, and the reduced interest rate burden will help promote investment and consumption.