The International Monetary Fund has cut its China growth forecast for 2019 due to threats from protectionist policies overseas and restrictive economic policy at home, Caixin reports. The fund also predicts a bleaker outlook for the world economy.
The IMF revised its predictions for global growth down to 3.7% next year, from its forecast of 3.9% made in July. Both China and the US had their forecasts downgraded – the US to 2.5% from 2.7%, and China to 6.2% from 6.4%.
“In several key economies, moreover, growth is being supported by policies that seem unsustainable over the long term. These concerns raise the urgency for policymakers to act,” wrote IMF Economic Counsellor Maurice Obstfeld.
The organization highlighted elsewhere this week that it considers “escalating trade tensions and the potential shift away from a multilateral, rules-based trading system are key threats to the global outlook.”
Obstfeld pointed out, however, that trade friction is not the only headwind facing China. Beijing’s recent focus on deleveraging and reining in financial risk renders it “completely predictable” that Chinese growth will slow. In the report, the IMF said it expected China’s GDP to fall 1.6% under what it would be without a trade war by 2020.