BUSINESS China's economy contributes to global growth: IMF


China's economy contributes to global growth: IMF


10:47, February 05, 2023

China's economy is expected to contribute to a quarter of global growth this year, according to the latest projection of the International Monetary Fund (IMF) on Friday.

The seal for the International Monetary Fund (IMF) in Washington, DC, January 26, 2022. (Photo: CFP)

China's economy is set to rebound this year as liquidity and activity pick up following the lifting of pandemic restrictions, providing a boost to the global economy. The country's economy is projected to grow 5.2 percent this year, compared with 3 percent last year.

The IMF analyses that when China’s growth rate rises by 1 percentage point, growth in other countries increases by around 0.3 percentage points.

China's economy needs reforms to secure the recovery and promote balanced, green, and inclusive growth, according to the IMF. The organization recommends keeping fiscal policy neutral in 2023, with additional monetary policy accommodation helping secure the recovery amid muted inflation pressures and growth below its potential.

Additionally, it is necessary to implement a feasible set of reforms to improve future prospects. For example, increasing the role of household consumption in demand, gradually raising the retirement age to increase labor supply, strengthening unemployment and health insurance benefits, and reforming state-owned enterprises to close the productivity gap with private firms will greatly help shore up growth in the coming years. Implementing these reforms would raise China's income levels by about 2.5 percent over five years.

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