IMF lowers growth forecast to 7.4%
Print Edition
THE International Monetary Fund has lowered China’s economic growth forecast for this year to 7.4 percent, down from 7.5 percent in April.
The projection was based on China’s moderating domestic demand, slower investment and rising risks of a deeper adjustment in real estate activity. But it was within a safe range that the government may tolerate, the IMF said in a report.
“Measures taken by the authorities to support growth are expected to bring it in line with the annual target of around 7.5 percent,” IMF said in its annual summary, 2014 Article IV Consultation with China.
“Fiscal policy has been accommodative, with stimulus mainly through off-budget spending at the local government level,” the report said. “Heavy reliance on capital spending and credit has sustained rapid growth, helped reduce external imbalances, and provided a welcome lift to the global economy.”
In the first half, China’s gross domestic product expanded 7.4 percent, with the pace picking up to 7.5 percent in the second quarter from 7.4 percent in the first three months. The stabilization came after the government rolled out a set of targeted measures, or mini-stimulus, to bolster growth.
The IMF said investment was the largest contributor to growth and consumption growth was robust. Urban household income was growing faster than GDP, and the share of services in output and employment was also rising.
However, the fund said China needed to address the risks of declining efficiency of investment, a significant buildup of debt, income inequality and environmental costs, which threaten growth prospects.
The IMF said China’s economic growth may slip to 7.1 percent in 2015, down from 7.3 percent as predicted.
The lower forecast comes at a time when other economists were more optimistic. Chang Jian at Barclays said that while fears of a hard landing and a credit crisis dominated the first quarter, recent weeks have seen a sharp turnaround in sentiment. “The optimism reflects upside data surprises and positive news in July,” Chang said. “As growth stabilizes, we expect the government to shift its focus to reforms in the second half.”
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
