The IMF has lowered China’s 2026 economic growth forecast to 4.5 per cent from 4.6 per cent, citing weak domestic demand and continued property sector woes….reports Asian Lite News Desk
The International Monetary Fund (IMF) has lowered its forecast for China’s economic growth in 2026 to 4.5 per cent, citing weak domestic demand, sluggish investment and continued pressure on the property sector despite strong export performance. The revised projection places growth at the lower end of Beijing’s annual target range of 4.5 to 5 per cent, highlighting the challenges facing the world’s second-largest economy.
In its October 2026 World Economic Outlook, released on Tuesday, the IMF reduced its growth forecast from the previous estimate of 4.6 per cent. The revised outlook reflects persistent economic pressures that robust exports have only partly offset, according to a report by the South China Morning Post.
Weak consumer spending, subdued investment and continued difficulties in the property sector remain major constraints on China’s economic recovery. The IMF also warned that higher global oil prices, prolonged uncertainty and structural challenges could weigh further on economic activity.
However, the Fund expects policy support from Beijing to help prevent a sharper slowdown.
Higher oil prices pose additional risks
The IMF’s outlook highlighted rising energy costs as a potential threat to global economic growth. It projected crude oil prices could reach $130 a barrel between the fourth quarter of 2026 and the first quarter of 2027.
Average oil prices are forecast to rise by 17 per cent in 2026 and 40 per cent in 2027, adding to the pressures facing energy-importing economies, including China.
Higher oil prices could increase production and transportation costs, while adding to financial pressure on businesses and households. Combined with weak domestic demand, these external risks could make it more difficult for China to sustain economic momentum.
China’s foreign ministry responded to the revised outlook by maintaining that the country’s economic fundamentals remained strong and expressing confidence in its future growth prospects.
Weak domestic demand weighs on recovery
China’s economy continues to face pressure from subdued domestic consumption, a prolonged property market downturn and rising external risks.
Gross domestic product expanded by 4.3 per cent in the second quarter of 2026, marking the slowest pace since late 2022 and falling short of market expectations.
The weakness in domestic demand has become a key concern for policymakers as they seek to maintain growth while addressing structural problems in the economy.
Although exports have provided support, the IMF’s revised projection indicates that external demand alone may not be sufficient to offset domestic economic weakness.
China recorded exports worth $401.44 billion in August, while its trade surplus reached $805.51 billion during the first eight months of 2026, according to the report.
The IMF expects the country’s trade surplus to widen further this year after reaching a record $1.2 trillion in 2025.
The strong export performance has helped cushion the effects of weak domestic spending, but the growing reliance on external demand also leaves the economy exposed to shifts in global trade conditions.
Further stimulus may be needed
JPMorgan said weak consumption could justify additional infrastructure spending and further economic stimulus. However, upcoming political events could make local officials more cautious, potentially slowing project approvals and delaying investment, the report said.
Infrastructure spending has been one of the tools available to Chinese authorities to support economic activity, but the effectiveness of further measures will depend on implementation and the response of businesses and consumers.
The IMF also lowered its forecast for China’s growth in 2027 to 4 per cent, from its previous projection of 4.1 per cent.
The revised estimates point to a gradual moderation in economic growth over the next two years as China grapples with domestic structural challenges and an uncertain global environment.
While exports continue to provide an important source of support, the IMF’s assessment underscores the need to address weak consumption and investment to sustain growth.
The outlook also highlights the risks posed by rising energy prices and global uncertainty, even as Beijing maintains confidence in the longer-term strength of the Chinese economy.
