IMF cuts China's growth forecast to 4.5 pc amid weak demand

New Delhi: The International Monetary Fund (IMF) on Tuesday lowered its forecast for China’s economic growth in 2026 to 4.5 per cent, citing persistent weakness in domestic demand despite strong export performance, a report has said.

In its latest World Economic Outlook released on Tuesday, the IMF cut its 2026 projection from 4.6 per cent, placing expected growth at the lower end of Beijing’s annual target range of 4.5 per cent to 5 per cent, according to the South China Morning Post.

It further said sluggish consumer spending, weak investment and ongoing strains in the property sector continued to weigh on the economy with robust exports only partly offsetting those pressures.

Moreover, the IMF also warned that higher global oil prices, prolonged uncertainty and structural challenges could further dampen economic activity.

However, it said policy support from Beijing was likely to prevent a sharper slowdown.

The fund expects oil prices to average significantly higher in the coming years, projecting crude to reach $130 a barrel between the fourth quarter of 2026 and the first quarter of 2027.

Average oil prices are forecast to be 17 per cent higher in 2026 and 40 per cent higher in 2027.

Responding to the revised outlook, China’s foreign ministry said the country’s economic fundamentals remained strong and expressed confidence in future growth prospects.

China’s economy has come under pressure from weak domestic demand, a prolonged property downturn and rising external risks. Gross domestic product expanded 4.3 per cent in the second quarter, the slowest pace since late 2022 and below market expectations.

The report further highlighted that China’s exports came at $401.44 billion in August, while the country’s trade surplus reached $805.51 billion in the first eight months of 2026.

The IMF said China’s trade surplus could widen further this year after hitting a record US$1.2 trillion in 2025.

However, JPMorgan said weak consumption may warrant further infrastructure spending and additional stimulus, but upcoming political events could make local officials more cautious and slow project approvals, the report said.

The IMF now expects China’s economic growth to slow further to 4 per cent in 2027, down slightly from its previous forecast of 4.1 per cent.

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