Space News from SpaceDaily.com
IMF cuts China growth forecast for 2021 and 2022
ADVERTISEMENT


Beijing, Oct 12 (AFP) Oct 12, 2021
China's economy will grow slower than initially expected this year owing to a "stronger-than-anticipated" pullback in public spending, the International Monetary Fund forecast Tuesday while warning that a weakening property market could bring a further blow.

The 8.0 percent prediction in the IMF's latest World Economic Outlook report is down 0.1 percentage points from its July estimate as analysts warn China is facing a painful fallout from real estate weakness and shocks from surging coal prices and shortages.

But the figure is still China's strongest growth rate since 2011.

The world's second-largest economy was the only major one to expand last year after the coronavirus pandemic forced governments across the globe to lock down.

The IMF also lowered its outlook for next year to 5.6 percent.

Concerns over China have intensified in recent weeks as government curbs on the property market piled pressure on overleveraged developers -- notably Evergrande.

Measures by local governments to meet short-term climate targets also led to a power crunch.

On Tuesday, the IMF said: "China's prospects for 2021 are marked down slightly due to stronger-than-anticipated scaling back of public investment."

The downward adjustment is the IMF's second since April, when it pegged full-year growth at 8.4 percent.

It also warned of risks that could threaten the resilience of the recovery.

"Large-scale disorderly corporate debt defaults or restructuring, for instance in China's property sector, could reverberate widely," it said.

The travails of Evergrande, which is struggling with more than $300 billion in liabilities, have thrown a spotlight on China's property developers -- after Beijing introduced metrics to cap debt ratios last year.

While analysts generally believe the firm's problems will not trigger a "Lehman moment", many warn they will worsen a slowdown in the property sector, which accounts for a massive part of the Chinese economy.

The IMF added that an escalation of trade and technology tensions between the United States and China could "weigh on investment and productivity growth, raising additional roadblocks in the recovery path".

Should the world's two biggest economies decouple in basic scientific research, there could also be "big negative effects" on global productivity, with an estimated decline of up to 0.8 percent to start, it said.

And in the longer term, demographic challenges in China and other emerging markets make it more pressing to reverse a persistent decline in long-term growth and build a more buoyant post-pandemic global economy.

Census results published in May this year showed China's population growing at the slowest pace in decades, fuelling concerns of a demographic slump in the ageing country.

Meanwhile, the IMF expects monetary policy in China to be "moderately tight" in 2021, and for this trend to remain into next year.


ADVERTISEMENT





Space News from SpaceDaily.com
Plato nears final camera installation for exoplanet hunt
Martian Seismic Data Suggests Potential Liquid Water Reserves at Depth
New UK Initiative to Revolutionize Solar Atmosphere Modelling

24/7 Energy News Coverage
EU asks Prague to hold off on S.Korean nuclear deal
Saudis launch new AI firm ahead of Trump trip
US, China agree to slash tariffs as Trump says will speak to Xi

Military Space News, Nuclear Weapons, Missile Defense
US announces new sanctions against Iran as talks proceed
Trump says would be 'stupid' to reject Qatari Air Force One gift
Indian PM Modi vows strong response to any future 'terrorist attack'

24/7 News Coverage
Nepal holds tribute for disappearing glacier
Viral Malaysia elephant death sparks calls for crossings
Copenhagen to offer giveaways to eco-friendly tourists



All rights reserved. Copyright Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.