IMF predicts slower growth for China over next two years
The International Monetary Fund (IMF) expects economic growth in China to moderate to 6.2% in 2019 and further to 6.0% in 2020, as uncertainty surrounds trade tensions and risks are tilted to the downside. Expected growth for 2019 is lower than the previous forecast of 6.3%, but within China's own target of 6.0-6.5%.
According to the first deputy managing director David Lipton, after a slow 2018, economic growth in China stabilised in early 2019, reflecting a wide range of policy support. However, renewed trade tensions represent a significant source of uncertainty which is weighing on sentiment. “Growth is expected to gradually slow to 5.5% by 2024 as the economy moves towards a more sustainable growth path,” adds Lipton. “Headline inflation is projected to rise to 2.3% in 2019, reflecting higher food prices.”
The US and China are at loggerheads in a trade war since July 2018, which escalated recently following an apparent collapse of high-level negotiations between the world's two biggest economies. The country needs to further open up and pursue other structural reforms that promote competition, IMF said.
In order to boost productivity and promote longer-term growth, further efforts are needed to reform state-owned enterprises, open up the service sector, and modernise policy frameworks, the IMF opined.
