China’s economy expected to grow 1% this year, says IMF
June 30, 2020 Category China News Round-up, Weekly
The International Monetary Fund’s World Economic Outlook Update says China’s economy will grow 1% this year and 8.2% in 2021, while global economic output is forecast to fall 4.9%,1.9 percentage points below the April estimate. The IMF expects the economies of the United States and the European Union to contract by 8% and 10.2%, respectively. India, which had been forecast to post positive growth in April, was downgraded in the June report. The Chinese economy is projected to rebound rapidly from its first quarter contraction, growing 8.2% in 2021 – the highest growth of any country. Its growth will contribute to the overall recovery of emerging markets and developing economies in 2021, which is projected at 5.9%, the report said. “The Covid-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the IMF said.
“The downturn could be less severe than forecast if economic normalization proceeds faster than currently expected in areas that have reopened – for example in China, where the recovery in investment and services through May was stronger than anticipated,” the IMF said. China’s economy is slowly recovering from months of crippling lockdowns at the beginning of the year, with authorities focusing on supporting vulnerable small and medium-sized firms by delaying loan repayments and freeing up access to bank loans, while expanding the social security net for under-pressure households. China’s industrial economy showed positive signs in May, but retail and investment remain weak. However, a new outbreak of coronavirus in Beijing, has cast further doubt over the pace of recovery, the South China Morning Post reports.
The IMF struck a note of caution over the forecast, saying there was uncertainty over the length of the pandemic, the extent of the lockdowns, unemployment rates and global supply chain reconfiguration, among other factors.
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