THE JANUARY 2020 update to the International Monetary Fund’s World Economic Outlook, published to coincide with the opening of the World Economic Forum in Davos Switzerland, contains nothing in its outlook for China that will cause any of the forgathered business and economic elites to choke on their canapés in surprise.
The Fund’s summary is as follows:
Growth in China is projected to inch down from an estimated 6.1 percent in 2019 to 6.0 percent in 2020 and 5.8 percent in 2021. The envisaged partial rollback of past tariffs and pause in additional tariff hikes as part of a “Phase One” trade deal with the United States is likely to alleviate near-term cyclical weakness, resulting in a 0.2 percentage point upgrade to China’s 2020 growth forecast relative to the October WEO. However, unresolved disputes on broader US-China economic relations as well as needed domestic financial regulatory strengthening are expected to continue weighing on activity.
Growth for 2019 came in at 6.1%.
On the dispute between China and the United States, the IMF is realistic if downbeat:
Higher tariff barriers between the United States and its trading partners, notably China, have hurt business sentiment and compounded cyclical and structural slowdowns underway in many economies over the past year. The disputes have extended to technology, imperiling global supply chains. The rationale for protectionist acts has expanded to include national security or currency grounds. Prospects for a durable resolution to trade and technology tensions remain elusive, despite sporadic favorable news on ongoing negotiations.
The Fund’s forecast is a tad more optimistic than the World Bank‘s most recent, but the general direction is the same, a trend growth slowdown whose pace is vulnerable to external unpredictability.
China Bystander 