China is expected to play a significant role in boosting the global economy by contributing to about one-third of the world’s growth in 2023, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has said.
China 🇨🇳 is set to account for around 1/3 of global growth in 2023, says IMF Managing Director, Kristalina Georgieva @IMFNews pic.twitter.com/18ChaKBWek
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Georgieva made the comments as part of her remarks at the 2023 China Development Forum in Beijing, noting a one percentage point increase in China’s GDP growth would result in a 0.3 percentage point growth in other Asian economies.
According to the IMF’s January forecast, China’s GDP is expected to grow by 5.2 percent in 2023, which is over 2 percentage points higher than the 2022 rate. Georgieva believes that China’s social and economic development plan, which has set a target of over 5% GDP growth in 2023, will contribute to the country’s robust rebound and the resulting boost to the global economy.
Georgieva credits the rebound in private consumption, as the economy reopens and activity normalizes, as the driving force behind China’s growth. However, she also acknowledges that global growth will face challenges in 2023 due to the pandemic, the war in Ukraine, and monetary tightening, which will slow economic activity.
“It is also clear that risks to financial stability have increased. 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.”
– Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF)
Georgieva believes policymakers have acted decisively in response to financial stability risks and advanced economy central banks have enhanced the provision of U.S. dollar liquidity. These actions have eased market stress to some extent but uncertainty is high which underscores the need for vigilance.
In this climate, the IMF will be paying close attention to the most vulnerable countries, particularly low-income countries with high levels of debt.
China is seen as the shining light in a distressed global economy with some experts even more optimistic about the Asian giant’s economic growth. Chen Fengying, the former director of the Institute of World Economic Studies in the China Institutes of Contemporary International Relations, predicts that China’s GDP could grow by 6% in 2023 although Beijing has not included this ambitious goal in its official plan.
China’s GDP growth rate was 3% in 2022 year-on-year impacted by multiple COVID-19 outbreaks and a turbulent global landscape. The country’s GDP in 2022 was 121.02 trillion yuan ($17.95 trillion).
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