BEIJING – China's economy is set to grow 5 percent this year, after a "strong" first quarter, the International Monetary Fund said on Wednesday, upgrading its earlier forecast of 4.6 percent expansion.

The IMF said it had revised up both its 2024 and 2025 GDP targets by 0.4 percentage points but warned that growth in China would slow to 3.3 percent by 2029 due to an ageing population and slower expansion in productivity.

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The global lender now expects the world's second-largest economy to grow 5 percent in 2024 and to slow to 4.5 percent in 2025.

Risks to the outlook are tilted to the downside, including from a greater or longer-than-expected property sector readjustment.

Gita Gopinath, First Deputy Managing Director, IMF

"The upgrade that we have for this year mainly reflects the fact that first quarter GDP growth came in stronger than expected, and there were some additional policy measures that were recently announced," IMF's First Deputy Managing Director Gita Gopinath said in Beijing.

China's economy grew at a faster than expected 5.3 percent pace year-on-year in the first quarter.

"Inflation is expected to rise, but stay low, as output remains below potential. Core inflation is projected to increase only gradually to average around 1 percent in 2024," Gopinath said at a press conference to mark the release of the fund's annual review of China's economic policies.

A string of recent economic indicators for April including factory output, trade and consumer prices suggest the $18.6 trillion economy has successfully navigated some near-term downside risks.

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"Risks to the outlook are tilted to the downside, including from a greater or longer-than-expected property sector readjustment," Gopinath said.

"The ongoing housing correction, which is necessary for steering the sector to a more sustainable path must continue."