China’s 2020 growth rate prediction raised to 6.0 per cent by IMF after US trade war deal

The International Monetary Fund (IMF) revised up its gross domestic product (GDP) prediction from 5.8 per cent in October after the phase one deal was signed last week

IMF cuts global GDP forecast for 2020 to 3.3 per cent from 3.4 per cent, with ‘lion’s share’ of the downward revision due to weaker growth in India

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The International Monetary Fund (IMF) expects China’s growth rate to ease further to 5.8 per cent in 2021, a downward revision from the 5.9 per cent rate previously expected. Photo: EPA

Published: 9:00pm, 20 Jan 2020Updated: 2:54pm, 17 Feb 2020

China’s economy will growth by 6.0 per cent in 2020, the International Monetary Fund predicted on Monday, with the upwards revision reflecting a feeling that “global growth may be bottoming out”.

The change from its previous prediction of 5.8 per cent in October followed the tariff reductions included in last week’s phase one trade deal with the United States.

Despite continued economic headwinds, “some indications emerged toward year-end that global growth may be bottoming out,” the IMF said, citing in particular the monetary easing by major economies last year, the reduction of US-China trade tensions and the easing of fears of a no-deal Brexit in Britain.

The International Monetary Fund (IMF), though, expects China’s growth rate to ease further to 5.8 per cent in 2021, a downward revision from the 5.9 per cent rate previously expected, due to the continuing impact of the US-China trade dispute and further toughening of Chinese financial regulation.

On Friday, China confirmed its economy grew at 6.1 per cent in 2019, the lowest growth rate since political turmoil ravaged the country in 1990.

Global growth this year is expected to be 3.3 per cent, up from 2.9 per cent last year, but below the IMF’ 3.4 per cent forecast made in October. According to the Washington-based IMF in the January update of its World Economic Outlook, global growth is seen rising to 3.4 per cent in 2021, 0.2 per cent below the previous forecast.

While current risks to global activity are “less tilted to the downside” than they were in October, downside risks “remain prominent,” the IMF warned, citing geopolitical risks – particularly conflict in the Middle East– and continued global trade tensions.