According to the Executive Board of the International Monetary Fund (IMF):
China’s economy is expected to grow at around 7¾ percent this year, notwithstanding a moderate slowdown during the first half, with resilient domestic demand offsetting lingering weakness in the external environment. Inflation has continued its downward path, and with persistently high investment contributing to excess capacity in many sectors, is likely to remain subdued around 3 percent this year and next.
Macroeconomic policies have been supportive toward achieving this year’s growth target. The overall fiscal deficit is likely to be around 2 percent of GDP.
Strong growth in total social financing is expected to underpin a slight rebound of activity in the second half of this year. Capital inflows have resumed in recent months and the renminbi has appreciated by around 1½ percent against the U.S. dollar in the year through June, and by about 6 percent in real effective terms. International reserves have risen to about US$3.44 trillion at the end of March (up from US$3.31 trillion at the end of 2012).
China’s progress on external rebalancing has been substantial—the current account as a share of GDP is now less than a quarter of its pre-crisis peak in 2007. By contrast, domestic imbalances remain large. National accounts data show that last year gross fixed capital formation grew further as a percent of GDP, while private consumption was broadly unchanged, indicating that a decisive shift toward a more consumption-based growth path has yet to occur. Accelerating the transformation of the growth model remains the main priority, as reaffirmed in recent policy announcements by the new administration.
China’s economy is expected to grow at around 7¾ percent this year, notwithstanding a moderate slowdown during the first half, with resilient domestic demand offsetting lingering weakness in the external environment. Inflation has continued its downward path, and with persistently high investment contributing to excess capacity in many sectors, is likely to remain subdued around 3 percent this year and next.
Macroeconomic policies have been supportive toward achieving this year’s growth target. The overall fiscal deficit is likely to be around 2 percent of GDP.
Strong growth in total social financing is expected to underpin a slight rebound of activity in the second half of this year. Capital inflows have resumed in recent months and the renminbi has appreciated by around 1½ percent against the U.S. dollar in the year through June, and by about 6 percent in real effective terms. International reserves have risen to about US$3.44 trillion at the end of March (up from US$3.31 trillion at the end of 2012).
China’s progress on external rebalancing has been substantial—the current account as a share of GDP is now less than a quarter of its pre-crisis peak in 2007. By contrast, domestic imbalances remain large. National accounts data show that last year gross fixed capital formation grew further as a percent of GDP, while private consumption was broadly unchanged, indicating that a decisive shift toward a more consumption-based growth path has yet to occur. Accelerating the transformation of the growth model remains the main priority, as reaffirmed in recent policy announcements by the new administration.
