A prolonged slowdown in China would have major repercussions globally, International Monetary Fund Managing Director Kristalina Georgieva said on Thursday, adding, however, that Beijing has room to adjust its monetary policy to provide support.
On Tuesday, the International Monetary Fund cut its growth forecast for China this year to 4.4%, well below Beijing’s target of around 5.5%, on the risk of lockdowns. widespread COVID-19 and supply chain disruptions.
In a videotaped speech at the annual Boao Forum for Asia, Georgieva said China’s actions to counter its economic slowdown are vital to global recovery.
“Fortunately, China has policy space to provide macroeconomic monetary policy support, including shifting focus to vulnerable households to bolster consumption, which can also help support China’s climate goals by steering economic activity toward more vulnerable sectors.” low-carbon,” added Georgieva.
“More political effort in the real estate sector can also help ensure a balanced recovery.”
At the same event, Chinese President Xi Jinping stated that the Chinese economy is resilient and its long-term trend has not changed.
In light of mounting headwinds, foreign brokers have also cut GDP forecasts for China, after weak March activity data raised risks to the outlook, as the lockdown continues. the megacity of Shanghai.
Barclays on Tuesday cut its forecast, already below consensus, to 4.3% from 4.5% previously, while BofA lowered its forecast for this year to 4.2% from 4.8% previously.
Nomura on Thursday revised its forecast to 3.9% this year from 4.3% previously, with second-quarter growth expected to grow a meager 1.8%, according to its baseline estimates.
“What we see in China is that consumption is falling short, not recovering strongly enough,” Georgieva told a news conference at the IMF and World Bank spring meetings on Wednesday. “So instead of putting money into public investments, you have to put it in people’s pockets, so that there is more dynamism from a rebound in consumption.”
China’s Ministry of Commerce said on Thursday that it would launch targeted measures to boost consumption recovery. Spending has been hit hard by nationwide lockdowns that began last month to contain the spread of COVID-19.
Final consumption accounted for 69.4% of China’s GDP growth in the first quarter, according to official data.