IMF: We may have to lower our forecasts for Chinese economy ‎growth ‎

The Director of the International Monetary Fund, Kristalina Georgieva, warned that the fund may be forced to reduce its growth forecasts in China, as the strict “zero Covid” policy impedes economic activity and sparks protests.

Georgieva said in Berlin during a press conference with German Chancellor Olaf Scholz and a number of leaders of international organizations, on Tuesday: “While we expect a growth of 3.2% for this year and 4.4% for the next year, there is a possibility in this period that prevails.” She added that there is a great state of uncertainty, that we may have to revise these expectations downward.

The IMF director explained, “There are two factors behind this slowdown in growth, the restrictions related to (Covid), and the difficulties in the real estate sector,” which faced a series of bankruptcies of developers and difficulties in completing projects.

However, the director of the International Monetary Fund stressed that “China has a financial margin to stimulate its economy and address any pressures towards reducing growth.”

“China is also reviewing its zero Covid policy to combat the virus for a more targeted response in order to reduce the disruptions faced by the Chinese economy and the negative repercussions for the rest of the world,” she said.

Last week, a member of the Monetary Policy Committee at the Chinese Central Bank, Wang Yiming, predicted that China’s GDP would grow by more than 5 percent over the next year.

Analysts polled by Bloomberg expect the Chinese economy to grow this year at an average of 3.3 percent, which will be the lowest growth rate for the world’s second largest economy in decades, before rising to just below 5% next year.

China’s economy grew faster than expected in the third quarter, but the strict restrictions of the Corona virus, the exacerbation of the real estate crisis, and the risks of a global recession may hinder Beijing’s efforts to promote strong growth during the next year.