Die Größe des Babys ist für sein Alter normal.

English Translation

The baby’s growth is normal for his age.

baby is neuter

Yes. For neuter nouns, it’s normal in German to use “sein” to show possession, even though this occasionally seems very strange:

Das Mädchen bringt seinen Hund mit = The girl is bringing her (literally “his”) dog with her.

(Just remember that the grammatical gender of a noun doesn’t necessarily reflect on the actual gender of the person, place, or thing that the noun refers to.)

In this particular example, it would be okay in English to say “the baby’s growth is normal for its age” if the sex of the baby is unknown, but in German, the possessive pronouns will typically follow the grammatical gender of the antecedent noun.

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Das Mädchen bringt seinen Hund mit = The girl is bringing her (literally “his”) dog with her.

Note that it’s literally “its”, although it’s indistinguishable from “his”, because “sein” happens to be identical for both.
But normally it would be interpreted as neuter, in accordance with the grammatical gender of “Mädchen”.

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