IMF cuts China's growth forecast amid 'disorderly corporate debt defaults'

WION Web Team
Beijing Updated: Oct 12, 2021, 07:16 PM(IST)

A China yuan note is seen in this illustration photo. Photograph:( Reuters )

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In April, the IMF had pegged China's growth this year at 8.4 per cent. The international fund also lowered China's growth for next year to 5.6 per cent.

The International Monetary Fund(IMF) lowered China's growth for this year citing "large-scale disorderly corporate debt defaults or restructuring".

The IMF added that "China's property sector could reverberate widely". IMF predicted China will grow at 8.0 per cent this year down by 0.1 percentage point from its July estimate.

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China has been hit by coal and power shortages including the Evergrande property crisis.  Evergrande has been struggling to clear its massive $300 billion in liabilities dragging down markets.

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

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In April, the IMF had pegged China's growth this year at 8.4 per cent. The international fund also lowered China's growth for next year to 5.6 per cent.

The IMF also highlighted "stronger-than-anticipated" pullback in public spending in China leading to growth going on a downward spiral.

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The IMF projected the global economy would to grow at 5.9 per cent in 2021 and 4.9 per cent in 2022 which is 0.1 percentage points lower for 2021 than the July forecast. 

According to IMF, India's economy is expected to grow by 9.5 per cent in 2021 and 8.5 per cent in 2022.

"The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics," Gita Gopinath, chief economist of the IMF, said.

(With inputs from Agencies)

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