The International Monetary Fund maintained its economic growth forecasts for China while trimming global growth projections for 2019 at the World Economic Forum in Davos, Switzerland.
China’s economic growth is projected to be 6.2 per cent for 2019, the same as the IMF’s previous prediction last October. Domestic demand is also estimated to remain robust, aided by policies to boost consumption this year, the IMF said in its Global Economic Prospects.
Figures show growth in China remains robust, in part reflecting resilient consumption. However, industrial production and new export orders have moderated, asset prices have experienced downward pressure, and sovereign bond spreads have risen amid trade tensions.
Prices of newly constructed residential buildings have rebounded, including in first-tier cities after a period of correction, according to the report.
The IMF projects a 3.5 per cent growth rate worldwide for 2019 and 3.6 per cent for 2020, down 0.2 and 0.1 percentage points compared with its forecasts last October, said Gita Gopinath, the IMF chief economist, at an Update of the World Economic Outlook press conference.
The world economy is growing more slowly than expected, risks are rising and the expansion seen in recent years is losing momentum, IMF managing director Christine Lagarde told the forum, calling for policymakers to collaborate to address global risks.
The reason for the gloomy forecast is the US-triggered trade tension between China and the US, which could dampen confidence in investment and economic development, said Wang Huiyao, a counsellor of the State Council, China’s cabinet. He is founder and president of the Center for China and Globalization, the Beijing-headquartered non-governmental think tank.
China is one of the world’s largest economic engines and the leader of the global value chain, so if the tension hurts both countries’ economies it would definitely harm world economic forecasts, Wang said. He added that China should continue its reform and opening-up, and support the world economy.
China’s support for the World Trade Organization and free trade is a counterbalance to the loss of momentum for the world economy, said Daryl Guppy, international financial technical analysis expert and special consultant to Axicorp.
He said that the IMF forecast does not adequately assess the contribution of the Belt and Road Initiative to economic growth, not just in developed economies but in emerging ones as well. In 2008 the world relied on China to lead the way and 2019 will be no different, Guppy said.
China’s year-on-year GDP growth reached 6.6 per cent in 2018, achieving its goal of around 6.5 per cent GDP growth set for the year, the National Bureau of Statistics said.
Wang said that, given the magnitude of the GDP at present, this kind of rate is already very impressive, so it is extremely important for China to maintain its above 6 per cent GDP growth with continuous reform and opening-up and trade with more countries at a fast pace.