IMF revises up its projection of China's growth

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 Monday.

The IMF now expects 6.5 percent growth for China's economy in 2017, up 0.3 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, IMF's economic counsellor and director of its research department, said in a press conference on Monday morning.

The global growth for 2016 is estimated at 3.1 percent, in line with the October forecast.

The report forecast economic activity in both advanced economies and emerging-market and developing economies (EMDEs) to accelerate in 2017-2018. Global growth for the two years is projected respectively at 3.4 percent and 3.6 percent, unchanged from IMF's October forecast.

Advanced economies are now projected to grow 1.9 percent in 2017 and 2.0 percent in 2018, respectively 0.1 and 0.2 percentage points higher than the October forecast.

It noted that the forecast is particularly uncertain in light of the potential policy changes from the incoming Donald Trump administration in Washington.

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

Growth projections have also been revised upward for Germany, Japan, Spain and the United Kingdom on account of a stronger-than-expected performance during the latter part of 2016.

The primary factor underlying the strengthening global outlook over 2017-2018 is the projected pickup in the growth of EMDEs, 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. IMF forecast EMDEs growth to further pick up to 4.8 percent in 2018.

While IMF marked up its forecast for China, it has revised downward the forecast for other major EMDEs such as Brazil, India, and Mexico.

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

The IMF, however, warned that China's continued reliance on policy stimulus measures, raises the risk of a sharper slowdown or a disruptive adjustment.

chenweihua@chinadailyusa.com

(China Daily USA 01/17/2017 page1)