More consumption: IMF expects slower growth in China

More consumption
IMF expects slower growth in China

According to the International Monetary Fund, the second largest economy in the world will grow more slowly in the future. This could be a problem, especially for those who export a lot to China.

According to the International Monetary Fund (IMF), China’s departure from its strict corona policy is providing new momentum in the region – but the country’s recovery is likely to slow down in the medium term. Growth in China is likely to shift from capital goods to consumption, according to an IMF blog post. “This could have significant implications for the region, particularly for economies that export to China at scale.”

The IMF expects economic growth of 5.2 percent in China this year. In the coming year, according to the forecast, it should only be 4.5 percent. Growth of 4.6 percent this year and 4.4 percent next year is forecast for Asia as a whole. Domestic demand in Asia has so far remained strong despite the tight monetary policy, while “foreign appetite” for technology products and other exports is waning, it said. The region is expected to contribute more than 70 percent to global growth this year.

In view of the recent banking turmoil, the IMF also sees dangers for Asia. Above all, banks in the industrialized countries there – including, for example, Japan or South Korea – could suffer losses if financing costs rose and the market values ​​of assets suddenly fell. The IMF writes that lenders in some emerging markets could face liquidity problems due to the sudden withdrawal of deposits or the reduction of leverage lines.

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