News Column

IMF Confirms China Growth Forecast Despite Q2 Dip

July 17, 2013

The International Monetary Fund (IMF) on Wednesday maintained its prediction that China's economy will grow around 7.75 per cent this year, despite the drop in growth reported for last quarter.

The figure compares with China's own projection and target of 7.5 per cent, down from 7.8-per-cent growth posted in 2012 and 9.3 per cent the year before.

The IMF repeated the growth prediction it made in late May, in a news release issued Wednesday after its executive board discussed a report on the country by its assessment team.

On Monday, China said its growth slowed to 7.5 per cent year-on-year in the second quarter, from 7.7 per cent in the first quarter, citing ongoing trouble in its export markets in the West.

The next day, the Asian Development Bank trimmed its economic growth forecast for the Asia-Pacific region from 6.6 per cent for 2013 to 6.3 per cent.

The IMF welcomed the relatively positive figures for China, saying its domestic demand was helping it face economic uncertainty abroad.

The country's inflation was to remain around 3 per cent this year and next, while fiscal deficit was set to be around 2 per cent of gross domestic product, similar to last year, the IMF said.

But China remained exposed to "external risks" from instability in Western economies, and to "mounting domestic vulnerabilities in the financial, fiscal, and real estate sectors," it said.

Further deregulation of interest rates, more market-based monetary management and better oversight of the financial market were needed to improve the allocation of capital, boost household income and prevent risk buildup, the release said.

China's Finance Minister Lou Jiwei was quoted last week as saying annual growth could fall as low as 7 per cent, before state media revised their reports to quote him as saying China was likely to meet the 7.5-per-cent target.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH. Distributed by MCT Information Services

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