In talks with CNBC at the World Economic Forum (WEF) in Davos, International Monetary Fund (IMF) managing director Kristalina Georgieva said that China was facing both short and long-term challenges & has warned China regarding needs of structural reforms to stay away from “a fairly significant decline in growth rates”.
This lethargic Growth in China’s economy was a result of real estate issues and downtrend in exports.Investors expected the economy to have grown by around 5 percent last year.
China’s property sector required “fixing” along with a high level of local government debt in the short term, the IMF chief said while summing up demographic changes and a “loss of confidence” as the long term challenges confronting the world’s second biggest economy.
Though raising growth forecast for China to 5.4 percent for 2023 after some policy changes,Washington, DC-based institution said it expected grow slow by 4.6 percent in 2024 as real estate struggles continues in the nation.
Ultimately, what China needs are structural reforms to continue to open up the economy, to balance the growth model more towards domestic consumption, meaning create more confidence in people, so [they] don’t save, they spend more,” Georgieva said.
“All of this would help China to deal with what we are predicting in the absence of reforms would be a fairly significant decline in growth rates going under 4 percent.”
Notably,Georgieva is among top economic figures at this year’s WEF meeting, which ends on January 19 . “Rebuilding Trust” is the theme of the the summit, with geopolitical tensions, global fragmentation as well as inflation and economic growth on the agenda.
Follow us on LinkedIn to be updated with the latest news.
