IMF cuts China’s growth view to 6.8%
Print Edition
THE International Monetary Fund yesterday cut its projection for China’s growth this year to 6.8 percent from the previous estimate of 7.1 percent made in January.
“This slowing is partly structural,” the IMF said in its latest publication “Asia and Pacific’s Outlook” due to diminishing returns from past reforms.
“Potential growth has declined even though China remains a middle-income country on a per capita basis, while weakness in the real estate and credit sectors has risen,” the report said.
China’s economic growth slowed to 7 percent in the first three months, the weakest quarterly expansion in six years after growing 7.4 percent in 2014.
The slowdown has prompted the central bank to make surprising cuts to both interest rates and bank reserve requirement ratio in the past two months.
Although China’s growth has eased “faster than expected,” the country is on track to more sustainable expansion, the IMF said.
“Following three decades of remarkable growth, China’s economy is slowing as rebalancing continues.
“While still outperforming most other large economies, China’s growth rate is expected to continue to edge lower over the medium term as rebalancing proceeds,” it said.
The IMF predicted China’s economic growth to ease to 6.8 percent this year and to 6.3 percent in 2016 as the correction in the property and related sectors continues to drag on investment.
“The challenge for China is to find new, sustainable engines of growth while managing weakness generated under previous policies,” IMF said, adding that China’s path to stable growth is essential for the rest of the world.
Last month, the World Bank Group projected China’s economic growth to ease to around 7 percent in 2015 and 2016. The Asian Development Bank in March forecast growth may cool to 7.2 percent this year and 7 percent in 2016.
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