China must deliver bigger fiscal stimulus as its economy teeters on deflation, a senior International Monetary Fund official said on Thursday.
“We welcome the fiscal support China has provided to the economy. But in our view, it is quite limited in size and scope,” Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, told a press conference.
In its World Economic Outlook (WEO), the IMF projected China’s economic growth to slow to 4.5% this year from 5.0% in 2025 due to weak domestic demand. It expects growth to slow further to 4.0% in 2027.
“Most of the growth in China is explained by external demand, and so the rebalancing, which we’ve been talking about for some time, has not really materialized,” Srinivasan said.
“We think that a lot more is needed in terms of fiscal stimulus in the near term until the economy reflates,” he said, calling for the need to push up prices in an economy “teetering on deflation.”
He also said China’s property crisis has “lingered for too long,” reiterating the IMF’s proposal to take policies to rehabilitate the real estate sector such as steps to boost household confidence and build social safety nets.
Source: Reuters
