IMF fixes projection of China’s economic growth

2017-01-17
China Daily

The International Monetary Fund revised upward its forecast for China’s economic growth on expectations of continued policy support, according to the latest IMF World Economic Outlook report released on Jan 16.

The IMF forecast 6.5 percent growth in China’s economy in 2017, up 0.3 of a percentage point from its October forecast.

“Our China growth upgrade for 2017 is a key factor underpinning the coming year’s expected faster global recovery,” Maurice Obstfeld, the IMF’s economic counselor and director of its research department, said at a news conference on Jan 16.

Global growth for 2016 is estimated to be 3.1 percent, in line with the October forecast.

The report forecast economic activity in advanced economies, as well as emerging markets and developing economies, to accelerate in 2017-2018. Global growth for the two years is projected to be 3.4 percent and 3.6 percent respectively, unchanged from the IMF’s October forecast.

Advanced economies are now projected to grow 1.9 percent in 2017 and 2 percent in 2018, 0.1 and 0.2 percentage points higher than the October forecast.

It added that the forecast is particularly uncertain in light of potential changes in policy stance under the incoming administration of US president-elect Donald Trump.

The IMF assumes that a fiscal stimulus will drive US growth to 2.3 percent in 2017 and 2.5 percent in 2018, a cumulative GDP growth improvement of 0.5 percentage points relative to the October forecast.

Growth projections have also been revised upward for Germany, Japan, Spain and the United Kingdom on account of stronger-than-expected performances during the latter part of last year.

The primary factor underlying the strengthening global outlook over 2017-18 is the projected pickup in the growth of emerging markets and developing economies, which is estimated at 4.1 percent in 2016 and projected to hit 4.5 percent in 2017, about 0.1 percentage point weaker than the October forecast.

While the IMF marked up its forecast for China, it has revised downward the forecasts for other major emerging markets and developing economies such as India, Brazil and Mexico.

“Among emerging economies, China remains a major driver of world economic development,” Obstfeld said.

However, the IMF warned that China’s continued reliance on policy stimulus measures, with rapid expansion of credit and slow progress in addressing corporate debt, raises the risk of a sharper slowdown or a disruptive adjustment.