China could see a sharp recovery in economic growth from the second quarter onwards based on current infection trends after the dismantling of most COVID-19 restrictions, IMF Deputy Managing Director Gita Gopinath said on Wednesday.
Speaking to Reuters on the sidelines of the World Economic Forum in Davos, Gopinath also reiterated the Fund's calls for nations to avoid a descent into protectionism.
She hailed China's reopening as a positive sign, alongside indications it was ready to re-engage with the world.
"We expect growth in China to come back, to rebound," Gopinath told Reuters in an interview.
"Looking at the infection trends, and if those persist, we could see a very quick recovery starting from after the first quarter of this year," she said of a current surge in infections seen as an "exit wave" linked to the economic reopening.
China's economy grew 3.0% in 2022, one of its worst economic performances in nearly half a century, hit by strict COVID curbs and a property market slump.
Economists polled by Reuters see Chinese growth in 2023 at around 4.9%, with some of them recently upgrading forecasts to around 5.5%.
Gopinath said that a growth rate "in the 4%-plus ballpark" would likely mean that any global inflationary pressures would be counter-balanced by the slowdown in demand elsewhere.
"But if growth in China comes in much more strongly, which is a possibility, then we could see another spike in oil prices or energy prices," she said.
Asked about recent U.S. inflation readings that suggest a cooling, Gopinath said it was too early to say for sure whether they meant that inflation was heading durably back down to the U.S. Federal Reserve's target of 2%.
"If we get readings similar to what we saw in the last month or two for another few months then we'll be in a good place," she said, noting that the labour market remained tight.
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