IMF raises China growth forecast to 8.4% in 2021
Published: Apr 06, 2021 08:46 PM
IMF Photo: VCG

IMF Photo: VCG

The IMF on Tuesday increased China's growth projection to 8.4 percent for this year, as effective COVID-19 containment measures boost the economy's strong recovery.

In its latest issue of the World Economic Outlook, the IMF put China's 2021 growth at 8.4 percent, up 0.3 percentage points from its January forecast. Its projection for China's economic expansion for 2022 remains unchanged at 5.6 percent.

The upward revision came amid an ascending trend as global growth was projected at 6 percent this year, up from the fund's January estimate of 5.5 percent.

The US economy was predicted to grow by 6.4 percent in 2021 with a moderate 3.5 percent the following year. This compares to the IMF's projection in January that the US economy would expand 5.1 percent this year before a 2.5 percent growth in 2022. 

In the case of India, the South Asian economy was expected to record an expansion of 12.5 percent this year, 1 percentage point higher than the IMF's January forecast. 

While the global economy is apparently on firmer ground, recovery would come across as divergent amid high uncertainty, the fund said in its report.

In emerging markets, "considerable differentiation is expected between China, where effective containment measures, a forceful public investment response, and central bank liquidity support have facilitated a strong recovery, and others," read the report.

China-US tensions that remain elevated on multiple fronts, ranging from international trade to intellectual property and cybersecurity, also got a mention in the report.

"Domestic economic disparities arising from the pandemic downturn may also prompt new trade barriers (…) Amid already high levels of trade restrictions, such actions would add to inefficiencies and weigh on the recovery. Furthermore, risks of protectionist tendencies surrounding technology are emerging," read the IMF report.

As for China's fiscal and monetary policies, the fund projected a mild tightening this year after a large fiscal expansion in 2020 and a continuously supportive monetary policy in 2021 before gradually returning to neutral in 2022.