- IMF expects emerging economies in Asia to grow at 5.2% in 2024, a 0.4 percentage point upgrade from its forecast in October.
- It also estimates China’s economy will grow 4.6% in 2024, or 0.4 percentage point higher than the IMF’s forecast in October.
- Growth in India will remain strong at 6.5% in both 2024 and 2025, according to the IMF, on resilient domestic demand.
Pedestrians walk past a Caixin Weekly magazine, published by Caixin Media Co., on display at a news stand in Beijing, China, on Sunday, March 6, 2016.
The International Monetary Fund revised up its growth forecast for developing Asia economies in 2024 as it remained optimistic on India, but warned of risks from China’s deepening property sector crisis.
It expects emerging economies in Asia to grow at 5.2%, a 0.4 percentage point upgrade from its prior forecast in October. This year’s growth is still expected to be cooler than the estimated 5.4% growth for 2023.
The IMF expects China’s economy to grow 4.6% in 2024, a 0.4 percentage point higher estimate than its last forecast in October. It cited stronger-than-expected growth last year and higher government spending to combat against natural disasters in China.
Even as it upgraded China’s overall growth outlook, it still warned, “deepening property sector woes in China or, elsewhere, a disruptive turn to tax hikes and spending cuts could also cause growth disappointments.”
The IMF emphasized thorough restructuring policy measures need to be implemented to stem China’s property woes. It warned that real estate investments could fall more than expected and for longer, hurting both domestic growth as well as that of trading partners.
“Unintended fiscal tightening in response to local government financing constraints is also possible, as is reduced household consumption in a context of subdued confidence,” the IMF said.
But the IMF said China could stage a stronger recovery if the government pursues property sector reforms or larger-than-expected fiscal support to boost waning consumer confidence and demand.
The real estate sector crisis has shown few signs of letting up. Earlier this week, debt-laden developer China Evergrande was ordered to liquidate by a Hong Kong court. That came just days after the China’s central bank and finance ministry announced measures to help boost the liquidity available to property developers.
Growth in India will remain strong at 6.5% in both 2024 and 2025, according to the IMF, on resilient domestic demand. The current projections for both years reflected a 0.2 percentage point upgrade from the October forecast.
The IMF also lifted its global growth forecast on the unexpected strength of the U.S. economy and fiscal support measures in China. It expects 3.1%, global growth this year, up 0.2 percentage point from its October projection, followed by a 3.2% expansion in 2025.
“What we’ve seen is a very resilient global economy in the second half of last year, and that’s going to carry over into 2024,” the IMF’s chief economist, Pierre-Olivier Gourinchas, told CNBC’s Karen Tso late on Tuesday.
The IMF expects global inflation of 5.8% in 2024 and 4.4% in 2025. For developed economies it expects inflation to cool to 2.6% this year, while inflation is projected to decline by just 0.3 percentage point to 8.1% for emerging economies in 2024.
— CNBC’s Jenni Reid contributed to this story.
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