BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/30
The latest forecasts of major international institutions and commercial banks see the Chinese economy growing about 6.5 % this year, a level of growth well in line with the government’s official GDP growth target. The lion’s share of forecasters see growth slowing to around 6–6.5 % next year. Most forecasts this year have seen little adjustment. In fact, the current figures almost exactly match those of January.
Although it is expected that China’s growth to remain strong in the near-term, all forecast bodies emphasise that uncertainty has been increasing. Growth this year has been supported with the usual means such as increasing government spending on infrastructure projects. Government led growth funded with borrowed money, however, only aggravates economic imbalances, which might unwind in a manner that causes disruption to the economy and leads to a sharp slowdown in growth. Forecasters also are in near-universal agreement on China’s long-term growth outlook. They expect economic growth to slow as China’s labour force begins to shrink, economic structures evolve and productivity gain become harder to come by as the country approaches the technology frontier. BOFIT releases its next forecast for China in September.
Select GDP growth forecasts for China, 2016–2017, %
