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Tuesday, April 18, 2017, 22:46

IMF upgrades China's growth forecasts

By Chen Weihua

IMF upgrades China's growth forecasts
This photo taken on July 14, 2016 shows a worker checking a toilet seat at a factory in Hangzhou, East China's Zhejiang province. (STR/AFP)
The International Monetary Fund has raised its growth forecast for the Chinese economy and global economy for the next two years.

In its latest World Economic Outlook, the IMF predicted that the Chinese economy will grow at 6.6 percent in 2017 and 6.2 percent in 2018, up by 0.1 percentage points and 0.2 percentage points, respectively, from its last such report in January. The increase was 0.4 percentage points and 0.2 percentage points from its forecasts in October.

The report was released on Tuesday, just a day after China's announcement that its economy grew by a robust 6.9 percent in the first quarter of this year.

It also came as the world's central bank governors and finance ministers were gathering for this week's 2017 IMF/World Bank annual spring meeting in Washington.

At the meeting, Pan Jiancheng, a senior official of the National Bureau of Statistics, forecast that given current trends, China's whole-year growth will be higher than its target of 6.5 percent.

Pan also urged policymakers to make use of the favorable situation to further push supply-side structural reform.

The IMF also adjusted its GDP prediction for the global economy upward to 3.5 percent in 2017, up by 0.1 percentage points from its January forecast. Its forecast for the global economy in 2018 remains unchanged at 3.6 percent.

Forecasts for the United States - 2.3 percent for 2017 and 2.5 percent for 2018 - are the same as in the January report.

Maurice Obstfeld, IMF economic counselor and research department director, said on Tuesday that momentum in the global economy has been building since the middle of last year, allowing the IMF to reaffirm its earlier forecasts of higher global growth this and next year.

He described the acceleration as broad based, across advanced, emerging and low income economies, building on gains in both manufacturing and trade.

The forecast for advanced economies was increased by 0.1 percentage points in 2017 to 2 percent, while the forecast for 2018 remains unchanged at 2 percent. The GDP forecast for emerging markets and developing economies remained unchanged from January at 4.5 percent for 2017 and 4.8 percent for 2018, more than double the growth rates for advanced economies.

"Our new projection for 2017 is marginally higher than what we expected in our last update. This improvement comes primarily from good economic news for Europe and Asia, and within Asia, notably for China and Japan," Obstfeld said.

The report said the increased growth forecast for China reflected stronger-than-expected policy support.

Despite the signs of strength, IMF believes many countries will continue to struggle this year with growth rates significantly below past results.

Commodity prices have firmed since early 2016, but at low levels, and many commodity exporters remain challenged.

"Whether the current momentum will be sustained remains a question mark," Obstfeld said.

Xin Zhiming in Beijing contributed to this story.

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