THE 0.3 OF a percentage point that the International Monetary Fund added to forecast for China economic growth this year in April has been removed again in its July update.
In its newly published World Economic Outlook update, the IMF has reverted to its January forecast of 8.1% GDP growth this year but has nudged up its estimate for 2022 to 5.7% from April’s 5.6%.
For the world economy as a whole, it is holding its 2021 forecast at 6.0% but raising that for next year to 4.9% from April’s 4.4%, while noting the developing divergence between economies with good access to Covid-19 vaccines against those without. China falls into the first category.
The IMF points to Beijing’ scaling back of public investment and overall fiscal support as the reason for the downward revision for 2021.
A further indication of the continuing slowing of the recovery is that the IMF is forecasting year-on-year growth of 4.2% in the fourth quarter of this year.
That is in line with indications from both authorities and high-frequency economic indicators that the recovery of the domestic economy is labouring.
It has been exports that have carried growth. Those are at risk if a third wave of the pandemic, driven by the Delta variant, takes hold in China’s key foreign markets.