IMF: China GDP growth to fall below 6%

China’s once-stellar economic growth will grind lower for the next five years and will fall below 6 percent in 2020, the International Monetary Fund (IMF) forecast on Friday.

The IMF sees China’s economy growing by 6.6 percent in 2016 — beating Shanghai officials’ target for this year — but slowing each year thereafter until 2021. The exception is 2018 and 2019, with growth of 6.0 percent seen in each year.

In a report on Friday, the IMF said China was struggling with slower private investment and weak external demand.

“The economy is advancing on many dimensions of rebalancing, particularly switching from industry to services and from investment to consumption. But other aspects are lagging, such as strengthening SOE (state-owned enterprise) and financial governance and containing rapid credit growth,” the IMF said.

Economists have long disputed the accuracy of China’s official economic data, but agree its economy has steadily slowed since growth above 10 percent was reported in 2010.

This year and last, global markets have been highly sensitive to hints that China’s slowdown is worsening, contributing to a major equity rout in January.

Markets wobbled at the start of this week after China reported a greater-than-expected fall in dollar-denominated trade for July.

Despite the slowdown, China’s growth outlook remains far higher than for advanced economies and many emerging ones. The IMF sees the world averaging economic growth of just 3.1 percent in 2016 and 3.4 percent in 2017.

CNBC

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell