The IMF Raises China’s 2025 Growth Forecast to 5.0%

On December 10, the International Monetary Fund (IMF) released its annual report on the Chinese economy, forecasting China’s growth rate at 5.0% in 2025 and 4.5% in 2026. This represents an upward revision of 0.2 and 0.3 percentage points respectively compared to the World Economic Outlook released in October.

The Chinese government has set a target of around 5% GDP growth for 2025. The IMF cited the government’s macroeconomic policies and the tariff reductions implemented by the US and China in November as reasons for the upward revision.

Due to the Chinese government’s “anti-involution” policies aimed at curbing excessive price reductions, production, and investment, the average inflation rate of 0% in 2025 is expected to rise to 0.8% in 2026.

The report points out that the continued sluggish real estate market, deteriorating local government finances, and weak consumer sentiment are leading to weak domestic demand and deflationary pressures. In the medium term, low productivity and an aging population will drag down economic growth.

The report recommends that, as a policy priority, the government should prioritize “moving away from excessive reliance on exports and investment and shifting to a consumption-driven growth model.” To expand domestic demand, fiscal stimulus policies and social security systems are needed, along with accelerated reforms in the real estate sector.