The International Monetary Fund has sharply cut its forecasts for China’s growth this year and next. In its latest half-yearly update to its World Economic Outlook, the Fund has reduced its forecast for 2012′s GDP growth to 8.2% from the 9% it forecast in September, and to 8.8% from 9.5% for 2013. The cuts come against a background of what it says are dimming prospects for the global economy and increasing risks to financial stability. The IMF now expects the world economy to grow at 3.3% this year, down from 3.8% last year, with world trade growth slowing to 3.8% from 6.9%. The IMF puts China among those emerging economies that can afford “to deploy additional social spending to support poorer households in the face of weakening external demand”.
Earlier this month, the World Bank also cut its forecast for China’s GDP growth this year, to 8.4% from June’s 8.7%. But unlike the IMF, which foresees recovery in China’s economy in 2013, the Bank said it expected growth to continue slowing next year.