“Davos”… China’s Economic Future: Structural Reforms Needed, Says IMF

According to Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), China needs structural reforms to prevent a significant decline in its growth rates.

Georgieva stated to “CNBC” on the sidelines of the World Economic Forum in Davos that:

“China is facing challenges both in the short and long term”

Georgieva explained that in the short term, the real estate sector in China still needs reform alongside the high level of local government debt. However, in the long term, the Managing Director of the International Monetary Fund pointed out changes in population composition and loss of trust.

Georgieva stated that China needs structural reforms in order to continue its economic openness and achieve a balance between the growth model and domestic consumption. This means increasing consumer confidence so that they do not save and instead opt for increased spending.

The managing director of the International Monetary Fund stated that all of this will help China deal with what we expect in the absence of reforms, which is a sharp decline in growth rates below 4%.

The Chinese economy experienced a weak growth in 2023 due to the crisis in the real estate sector and a decline in exports. Economists expect the Chinese economy to have grown by approximately 5% last year.