China will lead global growth despite economic slowdown, IMF report

China will continue to be the largest contributor to global growth this year and next, despite a slowdown in the country’s economic growth, according to the International Monetary Fund report released on Friday.

Steven Barnett, senior resident representative of the IMF in China, said the IMF projects a 3 percent and 2.9 percent global economic growth for the next two years, with China contributing one-third of it.

The launch of the 2023 IMF World Economic Outlook was organized by the IMF Resident Representative Office in China and the International Monetary Institute at the Renmin University of China in Beijing.

Zhou Chengjun, director general of the Financial Research Institute, People’s Bank of China, said he holds a cautiously optimistic view of China's macroeconomy, and the key to maintaining this attitude lies in China's real estate market.

“Urbanization and the demand for improved housing from residents will offer a vast potential for the real estate market,” Zhou said.“The key lies in adopting the right policies to meet these needs.”

In his address, Barnett highlighted the resilience of the 2023 global economy but noted the lingering economic scars left by the pandemic. Looking ahead, he expressed concerns about the long-term global economic growth, citing declining total factor productivity and the need for structural reforms to bolster growth.

Since 2018, due to increased trade restrictions and intensified competition among major economies, trade barriers worldwide have been on the rise each year.

Mehdi Benatiya Andaloussi, an economist at the research department of IMF, said the fragmentation of global commodity markets can lead to severe price volatility and exacerbate global GDP imbalances. Low-income countries, heavily reliant on agricultural trade, are particularly hard-hit. Additionally, market fragmentation increases the costs of green transitions for all nations.

He emphasized the importance of international cooperation to secure food and mineral resources, share data on critical minerals, and diversify supply chains to mitigate external risks.

Barnett also stressed the importance of reducing trade frictions, emphasizing WTO dispute resolution mechanisms, and addressing climate issues.

Silvia Albrizio, an economist from IMF’s research department, said that, except for China, many economies experienced record-high inflation rates in 2022, with core inflation being particularly notable.

She suggested that it might be challenging for most countries to return to their inflation targets by 2025, and stressed the importance of monitoring market participants' inflation expectations to guide monetary policy effectively.