IMF raises China and India's economic outlook, says global growth will remain lackluster

The International Monetary Fund has upgraded its growth forecast for China and India, predicting that the two countries would account for almost half of global growth this year.

China's economy is expected to grow 5% this year, higher than the its April projection of 4.6% but lower than the 5.2% expansion in 2023, the IMF said Tuesday.

GDP in the world's second largest economy is expected to further slow in 2025 to 4.5%, and be on a downward trajectory to 3.3% by 2029, according to the IMF's latest World Economic Outlook in July.

The rosier forecast for 2024 was in part due to stronger consumer activity and exports in the first quarter of the year, Pierre-Olivier Gourinchas, IMF's chief economist.

"The Chinese economy has grown tremendously in the last 15-20 years, and it's much less reliant overall on the external sector for its growth than it was maybe 15 years ago or 20 years ago," he said at a press briefing.

"By the very fact that China is also bigger, it means it has a bigger footprint in the rest of the world. An increase in the trade surplus might be small from Chinese perspective, but it could be big from the perspective of the rest of the world."

Gourinchas pointed out that those projections were made before China's latest GDP numbers were released.

Ahead of the IMF's report on Tuesday, Chinese official data showed its economy grew 4.7% year on year in the second quarter — falling below expectations of 5.1% growth by economists polled by Reuters.

"They indicate ... that maybe growth in China — in particular consumer confidence and problems in the property sector — are still lingering," Gourinchas warned. "This is something we flag in our data as a risk to the Chinese economy. And that seems to be perhaps