IMF says China's economic growth of 5% in 2024 was 'positive surprise'

By Andrea Shalal

WASHINGTON (Reuters) - China notified the International Monetary Fund on Thursday that its economy grew by 5% in 2024, IMF Chief Economist Pierre-Olivier Gourinchas told reporters, calling the development a "positive surprise" compared to the IMF's forecast of 4.8%.

Gourinchas said the IMF had increased its forecast for Chinese growth slightly to 4.6% for 2025 and by four-tenths of a percentage point to 4.5% for 2026, reflecting some increased momentum caused by fiscal measures, although that was offset by trade policy uncertainty.

But he stressed that China, the world's second-largest economy, still needed to make domestic demand a bigger engine of its growth, a message long delivered by the IMF to Chinese authorities, but that had not happened yet.

"The Chinese economy needs to pivot to a more domestically-driven engine of growth," Gourinchas said during an online news conference on Friday, adding that it would become increasingly difficult for the Chinese economy to expand through external trade alone.

"China is a very large economy, and it cannot just rely on the rest of the world to fuel its own domestic growth," he said, adding that Chinese authorities had adopted some measures to move in that direction, but more work was needed.

Any weakness in the Chinese economy would have spillover effects for many emerging and developing countries, posing a risk factor for the global economy, he said.

The IMF forecast Chinese growth would stabilize at 4.5% in 2026 as trade uncertainty dissipated and higher retirement ages slowed the decline in the country's labor supply.

China's top legislative body in September approved plans to raise the retirement age for men to 63 from 60, and to 58 from 55 for women in white-collar work. For women in blue-collar jobs it increased to 55 from 50.

(Reporting by Andrea Shalal; Editing by Paul Simao)