Kathmandu. The International Monetary Fund (IMF) has projected China’s economic growth rate to be 4.5 percent this year. The IMF has reduced its forecast after the Middle East conflict caused by the rise in energy prices and a slowdown in domestic consumption put pressure on economic activity.

In its ‘World Economic Outlook’ report released on Tuesday, the IMF said that China’s economic growth forecast has been reduced by 0.1 percentage points from the previous estimate released in July. China’s economic growth is expected to be limited to 4 percent in 2027.

According to the report, the rise in oil prices in the world market, continued uncertainty and structural problems will affect China’s economic activity. However, government policy support is expected to prevent a further decline in economic growth.

The IMF’s new projection has reached the lower limit of China’s economic growth target of 4.5 to 5 percent for this year. The long-term crisis in the real estate sector has weakened consumer confidence and slowed spending and overall economic activity. However, China is making progress in exports and high-technology areas such as artificial intelligence (AI) and electric vehicles.

India to grow at 7 per cent

India’s economic growth forecast has been significantly increased compared to China. The IMF has raised India’s economic growth forecast for this year by 0.6 percentage points to 7 percent.

According to the report, the pace of economic activity in India, favorable demographic conditions, expanding domestic markets and structural reforms have boosted the prospects of economic growth.

At the same time, the economic growth projections of South Korea and Taiwan have also been increased due to the increase in global demand for AI chips. The IMF forecasts that South Korea’s economic growth will be 3.3 percent and Taiwan’s will be 10.7 percent this year.

Taiwan and South Korea have a combined share of 62 percent of the net trade in related computing materials, according to the report. While some countries in Southeast Asia may benefit from the construction of AI data centers, small island nations may be affected by expensive energy, weak tourism, and a decrease in remittances.

Meanwhile, Japan’s economic growth is expected to be 0.7 percent this year, up 0.1 percentage points from July’s projection. Fiscal measures implemented by Prime Minister Sane Takaichi are expected to help mitigate the impact of fuel price hikes.