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IMF now forecasting China to grow by 8.4% in 2021
China’s economic growth rate for this year has been raised by the International Monetary Fund (IMF) as the organisation says the route out of the pandemic-induced economic crisis is “increasingly visible”.
The IMF, based in Washington DC, increased its forecast for economic growth for China in 2021 to 8.4%, 0.3% higher than its prediction earlier in the year.
The Chinese economy grew by 2.3% despite the coronavirus pandemic in 2020, while the government set its own target of 6%, which many economists expect will be exceeded.
The renewed optimism around China appears to be a response to the anticipated global recovery.
“With global growth being stronger, you have more exports. The US rescue plan also will increase demand for China’s goods,” said Gita Gopinath, the IMF’s chief economist and director of research.
However, Gopinath did also say that Chinese growth was unbalanced and somewhat reliant government spending.
“It’s still very heavily reliant on public investment. And private consumption has not recovered as fast as we would have hoped.”
On order for it to be “a durable recovery, our hope is that fiscal measures and other support measures would work in the direction of supporting the recovery coming from the private sector, as opposed to the public sector”, she added.
The IMF raised its overall global 2021 growth estimate by 0.5% to 6%, while its projection for 2022 was lifted by 0.2% to 4.4%.