The International Monetary Fund (IMF) has raised its growth forecasts for China, projecting the world’s second-largest economy to expand by 4.5 percent in 2026, according to its latest update of the World Economic Outlook.
The upward revisions reflect stronger-than-expected economic activity, underpinned by sustained stimulus measures, additional policy bank lending for investment, and improved export performance.
The IMF noted that China’s recent policy response, characterized by targeted fiscal support, accommodative monetary conditions, and measures to stimulate private investment and consumption, has helped stabilize domestic demand and bolster confidence amid persistent external pressures. These policy actions align closely with IMF recommendations aimed at balancing short-term growth support with longer-term financial and structural stability.
The improved outlook is also linked to easing trade tensions, particularly following a yearlong trade truce with the United States that lowered effective tariff rates on Chinese goods. According to the IMF, these developments, combined with continued stimulus over the past two years, have provided meaningful support to growth prospects.
China’s National Bureau of Statistics reported that the country’s gross domestic product reached a record $20.01 trillion, with the economy growing by 5 percent last year. NBS head Kang Yi said proactive and effective macroeconomic policies have helped cushion external shocks and stabilize the foundations for development, despite a challenging global environment. He added that China remains among the world’s most stable and reliable engines of global growth, contributing an estimated 30 percent to global expansion.
Globally, the IMF projects growth of about 3.3 percent in both 2025 and 2026, an upward revision from its October forecast. The resilience of the global economy, according to IMF chief economist Pierre-Olivier Gourinchas, reflects easing trade tensions, stronger fiscal support, supportive financial conditions, and the adaptability of the private sector. Improved policy frameworks, particularly in emerging markets, have also helped buffer economies against shocks.
The IMF highlighted the growing role of investment in information technology and artificial intelligence as a key driver of global resilience. While the surge in IT investment is most pronounced in the United States, its spillover effects are benefiting Asia, including China, through increased demand for technology components and equipment.
Despite the positive revisions, the IMF cautioned that structural headwinds, trade policy uncertainty, and potential financial vulnerabilities could weigh on China’s medium-term outlook. Growth is expected to moderate to around 4 percent in 2027 as these longer-term challenges become more pronounced. The Fund also warned that while AI-driven productivity gains could lift global output, tighter financial conditions or a sharp correction in valuations could dampen growth prospects.
Overall, the IMF expects China to remain a leading driver of growth among emerging economies, supported by policy flexibility, technological adoption, and its continued integration into global demand and investment flows.
