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IMF says China recovering fast ahead of most big economies

By The Assam Tribune
IMF says China recovering fast ahead of most big economies
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China is recovering fast ahead of most large economies, but the recovery is still unbalanced and facing significant downside risks, the IMF has said, projecting an eight per cent growth rate for the world’s second-largest economy in 2021.

However, the main concern around the Chinese recovery that the International Monetary Fund (IMF) has is the lack of balance, said Hlge Berger, Mission Chief for China and Assistant Director, Asia and Pacific Department of the IMF.

The recovery is still relying mostly on public support. Private investment has strengthened recently, but consumption is lagging. Growth rates and consumption recently have been higher, but the level of consumption compared to its pre-crisis trend is still rather low, he told reporters during a conference call on Saturday on the publication of the 2020 China Article IV Staff Report.

“China is recovering fast ahead of most large economies, but the recovery is still unbalanced and facing significant downside risks. We are seeing growth at around 2 per cent in 2020 and around 8 per cent in 2021. December numbers have been surprising on the upside, so there are some upside risks to that forecast,” said Berger.

On the other hand, he said that there are significant downside risks. Domestically, there is a pandemic risk that is still around. Also, the external environment has generally become a little bit more difficult for China and its economic relations with other countries.

“This is a large reason for the fact that we think that there’s still an output gap this year of 1.8 per cent. That’s the difference between what the economy potentially can have in terms of GDP and what we are actually expecting in terms of demand. So that’s where this lack of balance comes in, and this has important implications for the way macro policies should be conducted,” Berger said.

In the short term, he said, the IMF does not withdraw macroeconomic policy support prematurely in China. And this is the advice that other countries are getting from the IMF, so this is a bit of a global concern, but it applies to China as well.

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IMF says China recovering fast ahead of most big economies

China is recovering fast ahead of most large economies, but the recovery is still unbalanced and facing significant downside risks, the IMF has said, projecting an eight per cent growth rate for the world’s second-largest economy in 2021.

However, the main concern around the Chinese recovery that the International Monetary Fund (IMF) has is the lack of balance, said Hlge Berger, Mission Chief for China and Assistant Director, Asia and Pacific Department of the IMF.

The recovery is still relying mostly on public support. Private investment has strengthened recently, but consumption is lagging. Growth rates and consumption recently have been higher, but the level of consumption compared to its pre-crisis trend is still rather low, he told reporters during a conference call on Saturday on the publication of the 2020 China Article IV Staff Report.

“China is recovering fast ahead of most large economies, but the recovery is still unbalanced and facing significant downside risks. We are seeing growth at around 2 per cent in 2020 and around 8 per cent in 2021. December numbers have been surprising on the upside, so there are some upside risks to that forecast,” said Berger.

On the other hand, he said that there are significant downside risks. Domestically, there is a pandemic risk that is still around. Also, the external environment has generally become a little bit more difficult for China and its economic relations with other countries.

“This is a large reason for the fact that we think that there’s still an output gap this year of 1.8 per cent. That’s the difference between what the economy potentially can have in terms of GDP and what we are actually expecting in terms of demand. So that’s where this lack of balance comes in, and this has important implications for the way macro policies should be conducted,” Berger said.

In the short term, he said, the IMF does not withdraw macroeconomic policy support prematurely in China. And this is the advice that other countries are getting from the IMF, so this is a bit of a global concern, but it applies to China as well.

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