On Tuesday, pointing to a “strong” post-COVID-19 recovery, the International Monetary Fund upgraded its 2023 gross domestic product growth forecast for China to 5.4% from 5%, however it said the fund still expected to see a slowing of the Chinese economy next year.

Continued weakness in China’s property sector however may mix with subdued external demand to slow GDP growth to 4.6% in 2024, according to the IMF in a press release, though that is an improvement over the 4.2% increase the IMF foresaw in October in its World Economic Outlook (WEO).

The revision by the IMF came after the Chinese government decided to approve a 1 trillion yuan ($137 billion) sovereign bond issue and, in a move to boost the economy, allow governments of localities to frontload some of their 2024 bond quotas.

IMF’s First Deputy Managing Director Gita Gopinath said in the statement, “These projections reflect upward revisions of 0.4 percentage points in both 2023 and 2024 relative to October WEO projections due to a stronger-than-expected third-quarter outturn and recent policy announcements.”

The IMF projects that growth will gradually slow over the medium term to about 3.5% by 2028 as headwinds grow from an aging population and weak productivity.

Despite having introduced numerous measures to support the property market, China will still need to do more if it is to secure a quicker recovery and reduce the costs to the economy in the transition, according to Gopinath.

She noted that if a policy package is to be comprehensive, it will need to include measures to accelerate the removal of non-viable property developers, make housing price adjustments easier, allocate additional funding from the central government for the completion of housing projects, and assist viable housing developers to make the necessary changes to their balance sheets, and adapt to a smaller market for properties.