China’s growth forecast revised up
Print Edition
THE International Monetary Fund yesterday revised its forecast of China’s economic growth to 7.5 percent for this year and 7.3 percent in 2015 but it warned the slowdown in the country’s economy was “sharper than envisaged” despite the upward adjustment.
China’s slowdown was “sharper than envisaged” and its financial sector remained vulnerable, according to the IMF’s latest report, Regional Economic Outlook: Asia and Pacific.
“A sharper than envisaged slowdown in China — due to financial sector vulnerabilities and the temporary cost of reforms along the transition toward a more sustainable growth path — would have significant adverse regional spillovers,” the report said.
But the revision in both growth figures marked a rise of 0.3 percentage points from the previous forecast in October.
China’s gross domestic product grew 7.4 percent from a year earlier in the first quarter, the slowest in 18 months, while the growth was 7.6 percent in the fourth quarter of last year.
But some signs of improvement have emerged in recent months. Industrial profit jumped 10.1 percent in the first three months, better than the 9.4 percent rise in the January-February period, the National Bureau of Statistics said on Sunday.
China’s manufacturing activity may have rebounded this month as the HSBC Flash China Manufacturing Purchasing Managers’ Index ended at a two-month high of 48.3 in April, up from 48 in March.
The IMF said China’s planned reforms, amid a background of rising vulnerabilities, were far-reaching and could transform the economy.
“Implementation will be key ... The reforms could enhance welfare by boosting private consumption and making growth sustainable, although the economy could initially slow down somewhat,” the IMF said. “While the near-term impact on the rest of Asia is generally expected to be small, most economies in the region would benefit from the rising consumption in China.”
The IMF also said: “Efforts to cool down credit growth, raise the cost of capital, and dampen investment growth should continue.”
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