Beijing: The International Monetary Fund predicted on Friday that China's economy would contribute a quarter of the world's growth this year, but cautioned that the uncertainty surrounding Covid-19 and the real estate market might slow progress.
Beijing abruptly ended the zero-Covid policy in December after nearly three years of strict health restrictions, which had harmed the economy and sparked widespread protests. In 2022, the Asian giant experienced growth of just 3% due to strict lockdowns and a worsening crisis in the crucial real estate industry.
According to the IMF's annual assessment of the Chinese economy, "China's economy is set to rebound this year as mobility and activity pick up after the lifting of pandemic restrictions, providing a boost to the global economy."
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The Chinese economy is now anticipated to contribute a quarter of global growth this year, which is good news for China and the rest of the world, the report said.
After upgrading its global growth forecast in part due to the country's reopening, the IMF revised its growth forecast for China for 2023 up to 5.2 percent on Monday.
The soaring virus case numbers that accompanied the reopening, according to Chinese authorities, have now reached their peak, and a travel boom brought on by the largest Lunar New Year holiday in years is providing a much-needed boost to business.
However, the assessment released on Friday also foresaw "significant economic challenges" in the future.
It added that there was still some uncertainty regarding the virus's evolution and that the real estate downturn "remains a significant headwind."
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Since Beijing began to take action against excessive borrowing and unrestrained speculation in 2020, the real estate market, which together with the construction industry accounts for more than a quarter of China's GDP, has been severely impacted.
The IMF stated that population decline and sluggish productivity growth are longer-term growth inhibitors.
According to official data released last month, China's population shrank last year for the first time in more than 60 years, and the 1.4 billion-person country has seen birth rates fall to all-time lows as its workforce ages.
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The "main risks" to Chinese growth this year, according to the IMF, are the slowdown in global demand, the unpredictability of the Ukraine conflict, and geopolitical tensions.