(Bloomberg) -- China needs to keep recalibrating its Covid Zero strategy and bolster confidence in the property market in order to spur economic growth next year, the International Monetary Fund said.

The government will need to boost the pace of vaccinations and maintain them at a high level, the IMF said in a statement Wednesday after staff met virtually with Chinese officials as part of their annual Article IV discussions. To support the property market, China will need to do more to help developers complete unfinished projects, IMF staff said.

While China weathered the initial impact of the pandemic well, growth has since slowed and remains under pressure because of Covid, the property sector and weakening global demand, the IMF said. It forecasts growth of 3.2% this year, largely in line with economists’ projections, and 4.4% in 2023 and 2024. 

Like many other economies, China faces downside risks to its growth outlook, said IMF Deputy Managing Director Gita Gopinath, who held virtual meetings with Chinese policymakers.

Property sector “corrections have to happen, but the idea is to get it done in an orderly manner,” she said in an interview with Bloomberg TV’s Haslinda Amin. Property weakness is a potential risk for the financial sector, thought that wasn’t the IMF’s baseline forecast, she said.  

The IMF mission team recommended structural reforms in the real estate sector, including improving the model for how pre-sales work, and increasing the availability of alternative savings options. Authorities should also better protect new homebuyers from risks that the houses they’ve already paid for will be left unfinished, they said.

China should keep a neutral fiscal policy stance geared toward supporting households in 2023, the IMF said, which will help the economy re-balance. Monetary policy should remain accommodative and rely more on interest-rate based measures, it said.

The IMF’s growth projections were based on the assumption that the current zero-tolerance approach toward Covid will be gradually and safely lifted in the second half of 2023.

©2022 Bloomberg L.P.