The head of the International Monetary Fund has struck a positive note on China’s outlook, describing it as one of the “green shoots” in the world economy and urging authorities to rebalance the economy towards consumption.
Mrs. Kristalina Georgieva speaking during the China Development Forum in Beijing averred that the “strong rebound” in the China economy is important not only for itself, but for the world.
According to her, the robust rebound means China is set to account for around one third of global growth in 2023 – giving a welcome lift to the world economy.
IMF’s January forecast for China, as reported by Mrs. Georgieva, puts GDP growth at 5.2% this year, an increase of more than 2 percentage points from the 2022 rate, and driven by the anticipated rebound of private consumption as the economy reopened and activity normalized.
Despite the rebound, the head of IMF revealed that the outlook for the global economy over the medium-term is likely to remain weak.
“ Uncertainties are exceptionally high, including because of risks of geo-economic fragmentation which could mean a world split into rival economic blocs – a ‘dangerous division’ that would leave everyone poorer and less secure.”
Mrs. Kristalina Georgieva
Mrs. Georgieva also said it’s clear there has been an increase in financial stability risks and there’s an added need for vigilance.
“At a time of higher debt levels, the rapid transition from a prolonged period of low interest rates to much higher rates necessary to fight inflation — inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies.”
Mrs. Kristalina Georgieva
China’s Economic Readjustment Could Help Limit Carbondioxide Emission
Mrs. Kristalina Georgieva in her speech urged China to take measures to raise productivity and readjust its economy away from investment and towards more consumption-driven growth that is more durable, less reliant on debt, and will help address climate challenges.
To get there, she noted that China’s social protection system will need to play a central role through higher health and unemployment insurance benefits to cushion households against shocks.
More so, Mrs. Georgieva further communicated that market-oriented reforms to level the playing field between the private sector and state-owned enterprises, together with investments in education, would significantly lift the economy’s productive capacity, adding that: “A rebalancing of China’s economy could also lead to a 15% reduction in carbon dioxide emissions over the next three decades.”
“The combined impact of these policies could be significant. Again, this translates into benefits for the whole world: a fall in global emissions of 4.5% over the same period.”
Mrs. Kristalina Georgieva
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