China to see slow economic growth at 8% in 2021 with decrease in public investment: IMF

The International Monetary Fund (IMF) forecast states China's economy will grow slower than initially expected this year owing to a 'stronger-than-anticipated' reduction in public expenses. IMF's latest World Economic Outlook report displayed the 8% prediction which is down 0.1% points from its July estimate as analysts warn that China has been witnessing a pullout from real estate weakness and shocks from surging coal prices and dearths. Notably, the figure still shows China as the strongest growth rate since 2011. 

The IMF said, "China's prospects for 2021 are marked down slightly due to stronger than anticipated scaling back of public investment."

Experts say that concerns over China deepened recently after the Xi Jinping-led regime imposed curbs on the property market mounting pressure on developers. In addition, measures by local governments to meet short-term climate targets also led to a power crunch. 

US & china 'trade and technology' tensions added to China's economy deficits: IMF

"Large scale disorderly corporate debt defaults or restructuring, for instance in China's property sector, could reverberate widely,'' IMF had said. 

Also, the IMF has said that the escalation in feuds in terms of trade and technology between the United States and China could 'weigh on investment and productivity growth, raising additional roadblocks in the recovery path.' Furthermore, in far-fetched challenges in China, demography-related concerns in emerging markets make it more pressing to undo a persistent decline in long-term growth and construct a more buoyant post-COVID-19 economy globally. The IMF has estimated that monetary policy in China will be 'moderately tight' in 2021. 

GDP of China is projected to grow at 5.6% in 2022

Earlier in July, it had projected a growth rate of 8.1% for this year. The GDP of China is projected to grow at 5.6% in 2022. "The dangerous divergence in economic prospects across countries remains a major concern. Aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9% in 2024," said IMF chief economist Gita Gopinath in a blog.

"By contrast, aggregate output for the emerging market and developing economy group (excluding China) is expected to remain 5.5% below the pre-pandemic forecast in 2024, resulting in a larger setback to improvements in their living standards. These divergences are a consequence of the 'great vaccine divide' and large disparities in policy support. Furthermore, many emerging markets and developing economies, faced with tighter financing conditions and a greater risk of de-anchoring inflation expectations, are withdrawing policy support more quickly despite larger shortfalls in output," noted the IMF Chief economist.

Image: AP