China expected to boost global growth: IMF
beijing: China’s economy is expected to contribute a quarter of global growth this year, the International Monetary Fund said on Friday, although uncertainty around Covid-19 and the property sector could stifle momentum.
Ater almost three years of stringent health restrictions, Beijing in December abruptly ended the zero-covid policy that had batered the economy and provoked widespread protests.
The Asian giant posted growth of just three per cent in 2022, hammered by stringent lockdowns and a deepening crisis in the key property sector.
“China’s economy is set to rebound this year as mobility and activity pick up ater the liting of pandemic restrictions, providing a boost to the global economy,” the IMF said in an annual assessment of the Chinese economy.
“That’s good news for China and the world as the Chinese economy is now expected to contribute a quarter of global growth this year,” it said.
The IMF on Monday revised its 2023 growth forecast for China up to 5.2 per cent, ater upgrading its global growth forecast partially based on the country’s reopening.
Authorities in China have said the soaring virus case numbers that accompanied the reopening have now passed their peak, with a travel surge prompted by the biggest Lunar New Year holiday in years offering a much-needed boost to business.
However, Friday’s assessment also warned of “significant economic challenges” ahead.
“The contraction in real estate remains a major headwind, and there is still some uncertainty around the evolution of the virus,” it said.
The property sector, which along with construction accounts for more than a quarter of China’s GDP, has been hit hard since Beijing started cracking down on excessive borrowing and rampant speculation in 2020.
“Longer-term, headwinds to growth include a shrinking population and slowing productivity growth,” the IMF said.
China’s population shrank last year for the first time in more than six decades, official data released last month showed, and the nation of 1.4 billion has seen birth rates plunge to record lows as its workforce ages.
The slowdown in global demand, the uncertainties of the war in Ukraine and geopolitical tensions are the “main risks” to Chinese growth this year, the IMF said.
Sri Lanka bondholders: A group of overseas private creditors is ready to hold debt restructuring talks with Sri Lanka consistent with the International Monetary Fund’s programme, their legal adviser said on Friday.
The group “stands ready to engage quickly and effectively with the Sri Lankan authorities to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets,” the creditor’s legal adviser said in a leter to the Washingtonbased
lender. Global investment companies Amundi Asset Management, Blackrock, HBK Capital Management, Morgan Stanley Investment Management and T. Rowe Price Associates Inc. are among the group of around 30 creditors.
The combination of the pandemic, which ruined the tourist sector, the Ukraine war, which drove up the price of imported fuel and food, and economic mismanagement pitched the Indian Ocean island of 22 million people into its worst financial crisis in more than seven decades. And having run out of foreign currency to pay for basic imports, Sri Lanka defaulted on its foreign debt in May.
The country secured a preliminary deal on a $2.9 billion extended fund facility with the IMF in September, though no funds have been disbursed yet because the bailout has to be approved by the Fund’s executive board.
To unlock IMF’S cash disbursements, the government first needs to secure financing assurances from key bilateral lenders such as Japan, India and China. While India commited to help ease the debt burden of neighbour as part of the IMF programme, China’s Eximbank only offered a two-year moratorium, a move that for the United States is not enough. The United States has the biggest share of IMF votes.
The Paris Club of creditor nations, which includes Japan as a second major lender to Sri Lanka, will provide financing assurances in line with the Fund’s bailout, people with direct knowledge told Reuters on Thursday.
Sri Lanka has to restructure debt payments of about $13 billion on 11 outstanding bonds, approximately 50% of its total foreign currency debt.
The group represents around 60% of all Sri Lanka’s international bondholders, according to a person close to the creditors, who asked not to be named because details on the group composition are not public.