IMF cuts China growth estimate for 2012 to 8.25%
The International Monetary Fund (IMF) has cut its forecast for China's 2012 economic growth to 8.25 percent from the 9 percent projected in September.
By any measure, this would still be a result that any economy would welcome.
It warned that exports would be a significant drag on expansion in the coming two years.
The IMF has downgraded the prospects for global economic growth in 2012 to 3.25 percent from 4 percent, largely because the eurozone economy is expected to go into a recession this year.
"The risks to China from Europe are large and tangible," said Murtaza Syed, resident representative of the IMF's Beijing office, at a seminar on Monday.
China's economic growth, which came in at 9.2 percent last year, could fall by as much as 4 percentage points if the euro area experiences the IMF's downside scenario, which would see global growth falling by 1.75 percentage points.
But even in this worst-case scenario, China has room for a countervailing fiscal response, he said.
Not headed for hard landing
China is not heading for a hard landing and will remain a bright spot for global growth in the coming years. The IMF projects China's economy will grow 8.75 percent in 2013.
Both investment and consumption have been strong despite weakening external demand. Also, the government's efforts to calm the property market have been effective, and underlying investment remains healthy due to government efforts to expand the supply of subsidized housing.
Inflation is coming down to more comfortable levels, which should allow the authorities to fine-tune monetary conditions and supply the economy with modest additional credit, Syed said.
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