China to Contribute One-Third of Global Growth in 2023
China is expected to be a major contributor to global economic growth in 2023, according to forecasts from Morgan Stanley's chief China economist, Robin Xing. The International Monetary Fund (IMF) and the United Nations (UN) have both raised their economic growth forecast for China to 5.2 percent and 4.8 percent respectively, with the IMF estimating that China will account for one-fourth of global growth this year. Goldman Sachs Research has reported that China's adjustment of its COVID-19 pandemic response will not only speed up its own economic recovery, but also boost global economic growth.
Domestic demand in China is likely to increase by up to 5 percent in 2023, and the return in goods demand could provide a moderate boost of around 0.4 percent to GDP in most Asia-Pacific economies. This should bolster GDP in Asia-Pacific economies that export to China, while a recovery in demand for foreign services—particularly for international travel—should provide a modest boost to global growth as well. China's recovery will likely boost commodities demand and prices, which should benefit oil exporters such as Canada.
At the Central Economic Works Conference in mid-December 2022, Chinese President Xi Jinping told officials to find ways to boost the consumption capacity of low- and middle-income families by vigorously implementing a strategy of expanding domestic demand. China has ample fiscal space to provide more support to the economy in the adjustment phase, as the country has kept prices relatively low, with the annual consumer price index rising by 2 percent in 2022.
China's success in keeping prices relatively low has convinced the international community that it has ample room to continue its proactive fiscal policy and prudent monetary policy. As the global growth backdrop has brightened, Briggs and Kodnani of Goldman Sachs anticipate the broader spillover effects from Chinese growth—including more favorable global financial conditions and increased trade with other countries—to be larger. With the “earlier-than-anticipated reopening” driving an uptick in private consumption, China's economy is expected to account for a third of global growth in 2023, as long as the government avoids tightening macroeconomic policies and reaccelerates structural reforms.
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1. “Confidence high China can give boost to global growth recovery” China Daily, 12 Feb. 2023, https://www.chinadaily.com.cn/a/202302/13/WS63e97ca5a31057c47ebae51d.html
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