Quick Bites | Chinese growth to slow in coming years?
February 17th, 2023 | Article
By: Paul Zwi
Chinese growth to slow in coming years?
Amidst the kerfuffle over China’s “spy balloon” floating over the US, and the inevitable political tensions and fallout, we focus on the International Monetary Fund’s (IMF) medium-term outlook for the world’s second largest economy. This is of great importance to Australia as China remains our largest trading partner by a long shot (followed by Japan, the US, and South Korea).
China’s economy is set to bounce back after the lifting of pandemic restrictions and lockdowns, providing a boost to the global economy. The economy is forecast to expand by 5.2% in 2023, compared with a disappointing 3% last year. That’s good news for China and the world as the Chinese economy is expected to contribute around a quarter of global growth this year. Even so, China faces significant economic challenges. The contraction in real estate remains a major headwind, and longer-term, other pressures on growth include a shrinking population and slowing productivity trends.
Growth of 5% is a long way off the remarkable average of 9% per annum the country has achieved since opening to the world in 1978 – but of course, this growth is now off a far larger base. Much is at stake for the rest of the world; when China’s growth rises by 1%, growth in other countries increases on average by about 0.3% according to the IMF. And the effect on Australia’s growth is far greater, especially in the form of our commodity exports, tourism, and education sectors.
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