The Chinese economy is likely to grow again this year, but the crisis is still pressing on the country’s economy. According to the International Monetary Fund (IMF), the recovery is still very dependent of public investment and consumption remains weak. Partly for this reason, the fund has slightly lowered its growth forecast for China.
The second largest economy in the world is likely to grow by 7.9% this year. When the IMF presented its major report in October, it assumed an 8.2% plus. The crisis reduced the rate of growth to 1.9% last year, from over 6% growth in 2019. For the next few years, the fund will have just under 6% growth.
Last year China was the only big economy in the world that showed any growth. According to economists, the country mainly benefited from Rapid Intervention at the beginning of the coronary artery disease to prevent the spread of the virus. As a result, ordinary life could be more or less resumed during the year. This is how many factories soon opened up again. Real estate investments also resumed after a short period of time.
However, retail sales are still well below the pre-crisis level and unemployment remains relatively high, notes the IMF. A lot of households have seen their income fall sharply. The estimate also takes into account the lower prices of various products and the collapse of tourist flows from abroad.
According to the experts, the virus outbreak has also revealed that China still has a lot to do to reduce inequality in the country. Many Chinese people are not yet able to call for a good social safety net in the event of job losses. The IMF also recommends China to focus on boosting domestic demand with public investment, monetary policy and structural reforms.
The Washington organization publishes more often interim reports in which it examines the economy of a particular country. Not so long ago it was also the turn of the Netherlands. Here, both for 2021 and for 2022, the auditors provided an economic growth rate of 3%. However, the IMF noted that growth could be even more pronounced here if consumer spending suddenly picked up faster. This could happen, for example, if consumer confidence improves when many Dutch people have been vaccinated.