China’s economic slowdown to have ‘global repercussions’ beyond trade, hinder current account recovery, IMF says
- International Monetary Fund’s annual ‘External Sector Report’ highlights downside risks of China’s slow post-Covid economic recovery
- Weaker than expectations, China’s economy grew by 6.3 per cent in the second quarter, year on year, adding to concerns over momentum and its full-year target
China’s slow post-Covid recovery could hinder the anticipated narrowing of global current account balances this year, while the slowdown in the world’s second-largest economy will also pressure vulnerable emerging markets together with a strong US dollar, the International Monetary Fund (IMF) said on Wednesday.
“A weaker-than-expected recovery in China would affect its trading partners directly, the largest of which are located in Asia and the Pacific,” the Washington-based agency warned.
The slowdown would also have global repercussions beyond China’s major trading partners
The fund said earlier this year that China would contribute to more than 30 per cent of global growth this year.
The IMF, though, did not adjust its annual growth estimate of 5.2 per cent for China or its global growth prediction of 2.8 per cent made in the April edition of its “World Economic Outlook”.
“The slowdown would also have global repercussions beyond China’s major trading partners by affecting commodities for which China accounts for a large share of global demand,” the latest IMF report added.
China is the world’s major buyer of crude oil from Saudi Arabia and Russia, Australian iron ore, Brazilian soybeans and American corn.