IMF Cuts China's Growth Outlook

The International Monetary Fund (IMF) has slashed its growth forecast for China in 2013 to "around 7.75%", down from 8%, after weak global demand and reduced exports took its toll on the world's second-largest economy. 


The IMF also recommended China conduct fiscal stimulus if growth falls below the IMF's forecast.


The forecast is above the government’s target of 7.5 per cent, but follows a series of lowered 2013 growth estimates for China by private economists after a disappointing first-quarter performance and some continued sluggish indicators in April and May.


“The pace of (growth in) the economy should pick up moderately in the second-half of the year, as credit expansion gains traction in line with a projected mild pick-up in the global economy,” says David Lipton, First Deputy Managing Director of the IMF.


The IMF also said inflation in China would likely pick-up to 3 per cent by the end of the year while the current account surplus is expected to be equivalent to 2.5 per cent of gross domestic product (GDP) this year, compared with a 2.6 per cent of surplus-to-GDP ratio last year.


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