ISTANBUL

China's economic growth is projected to gradually decline over the medium term to around 3.3% by 2029 amid headwinds from weak productivity and an aging population, the International Monetary Fund (IMF) said Friday.

The world's second-largest economy has remained resilient despite continued weakness in the property sector, with gross domestic product (GDP) growing by 5.2% in 2023 and 5% annually in the first half of 2024, according to the IMF.

"Growth has been primarily driven by strong public investment and the post-COVID recovery in private consumption, with net exports also providing a boost more recently. However, inflation has been low in recent quarters amid continued economic slack," the IMF said in its Staff Concluding Statement of the 2024 Article IV Mission.

Inflation is expected to pick up gradually as the output gap closes and the impact of lower commodity prices wanes, said the financial agency.

It noted that deeper-than-expected contraction in the property sector, combined with high debt levels, could result in sustained disinflationary pressures and adverse macro-financial feedback loops.

"External risks include greater-than-expected weakening of external demand, and an escalation of fragmentation pressures," it said.

"On the upside, decisive policy action to facilitate adjustment in the property sector or market-oriented structural reforms could boost confidence and lead to a better-than-expected economic outcomes," it added.