IMF Cuts China’s Growth Forecast

The International Monetary Fund (IMF) has cut its growth forecast for China in 2013 to 7.75%, down from 8%, after weak global demand and reduced exports took its toll on the world’s second-largest economy.  

Low factory activity in April and May led many economists to predict reduced growth levels for China this year, a stance now supported by the IMF. Bank of America Merrill Lynch (BofA Merrill), for instance, lowered its China forecast earlier this month to 7.6% from 8%, while Standard Chartered cut its estimate to 7.7% from the 8.3% it had previously been predicting. 

The IMF’s revised forecast is above the Chinese government’s own target of 7.5% of growth this year, but in-line with general parameters. There is no suggestion that growth is going to stall dramatically, but rather fall back to a more manageable level.  

In the past, slowing growth in China has been met by government stimulus packages, although the consensus this time is that there will be no boost from policymakers as the nation becomes more tolerant of a slightly slower, more manageable economic growth speed.  

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