BOFIT Weekly Review 2016/15
International financial institutions expect Chinese growth to slow only slightly
The IMF’s April World Economic Outlook projects 3.2 % baseline growth of the global economy this year and 3.5 % in 2017. The IMF raised China’s GDP growth forecast slightly, and thanks to stimulus policies, now expects growth to be 6.5 % this year. The forecast matches the lower boundary of the growth target range set by the Chinese government for this year. As China makes progress in structural rebalancing, the IMF expects growth to slow to 6 % in 2018, a level at which growth should remain at least through the end of this decade. The IMF pointed out, however, that China’s structural reforms may prove to be more difficult than anticipated, which could hurt economic growth. A more-severe-than-forecast slowdown in China would also hurt growth of the world economy.
The March forecast of the Asian Development Bank (ADB) predicts a growth trend for China in 2016–2017 that essentially matches the IMF’s forecast. The World Bank (WB), in contrast, expects the Chinese economy to grow at a pace of 6.5 % a year through 2018.
Forecasters at the IMF, WB and ADB all expect India to maintain robust economic growth. India, partly due to its very low average income level, is set to enjoy the highest growth among the world’s large economies. Despite slower-than-hoped progress in economic reforms, India benefits e.g. from declines in energy prices.
GDP growth forecasts for China and India, %
* 2015 figures for India are estimates.
Sources: IMF, WB and ADB forecasts.