IMF lifts China growth forecast to 10-year high
The International Monetary Fund raised its 2021 growth forecast for China to 8.4 percent on Tuesday, as it projected a stronger global rebound from the pandemic but warned of “divergences in the speed of recovery.”
The figure is 0.3 percentage points above the IMF’s January prediction and would mark the country’s strongest growth rate since 2011, after the world’s second largest economy became the only major one to expand last year.
The IMF said “effective containment measures, a forceful public investment response, and central bank liquidity support have facilitated a strong recovery.”
China’s GDP grew 2.3 percent in 2020 and although leaders set a modest target of more than 6 percent this year, analysts widely expect a much higher number.
“China had already returned to pre-COVID-19 GDP in 2020, whereas many others are not expected to do so until well into 2023,” said the IMF.
Its forecast for China is much higher than other major economies including the United States, Germany and France, although behind India, which is forecast to grow 12.5 percent.
The IMF expects growth to slow to 5.6 percent next year, a projection unchanged from January. Despite the strong showing, it also warned geopolitical tensions between China and the US could weigh on recovery.
Meanwhile, it expects mild fiscal tightening for China and monetary policy to remain supportive this year.
The IMF raised its outlook for global economic growth, forecasting worldwide output would rise 6 percent this year, a rate unseen since the 1970s, thanks largely to the unprecedented policy responses to the COVID-19 pandemic.
That upgrade, from 5.5 percent less than three months ago, largely reflects a rapidly brightening outlook for the US economy, which the IMF now sees growing by 6.4 percent in 2021, the fastest since the early 1980s.
The outlooks for Germany, France and Japan hardly improved since January. Nonetheless, with the heft of the US outlook improvement as the main driver, the IMF marked up its advanced economy growth estimate to 5.1 percent from 4.3 percent.