The IMF cut its forecast for China’s economic growth to 6.3% in 2016

Almaty. January 28. Silkroadnews - Increase in the global economy’s rate of growth is characterized by dullness and inconsistency across the countries, with the displacement of risks in emerging markets, a bulletin of the International Monetary Fund (IMF) “World Economic Outlook” (WEO) says.
“The global growth, which, according to the current estimates, made 3.1% in 2015 is forecasted to reach 3.4% in 2016 and 3.6% in 2017. The revival of global activity will be more gradual than it was expected in the October issue of WEO 2015, particularly in countries with emerging and developing countries,”- said the bulletin of the IMF.
Growth in the advanced economies is expected to rise by 0.2 percentage points to 2.1% in 2016 and will remain at this level in 2017.
Emerging and developing countries are now faced with the new realities of the lower growth rates, with a combination of cyclical and structural factors that weaken the traditional paradigm of economic growth. The growth forecasts for the most emerging markets and developing countries show less significant increase in growth than it was predicted earlier. Growth in emerging and developing economies is projected to rise from 4% in 2015 (the lowest rates since the financial crisis of 2008-2009) to 4.3% and 4.7% in 2016 and 2017 respectively.
Thus, China’s growth is expected to slow to 6.3% (6.9% in 2015) in 2016 and 6% in 2017, primarily due to the weakening of investment growth in the ongoing economy’s rebalancing. In India and other countries in Asia, emerging markets as a whole are projected to maintain a stable growth, though the rebalancing of the Chinese economy and weak activity in the global manufacturing industry have a strong deterrent impact on the economy of some countries. In Europe, emerging markets are expected to operate with the stable growth rates, with some deceleration in 2016 though, as in Russia the economic downturn could continue in 2016. In the most countries in sub-Saharan Africa the growth shall accelerate gradually, yet the rate of growth will still remain at the level below one achieved in the past decade.
“If you go beyond the short-term forecasts, you will see the broad risks of the situation to get worsened versus the forecast made, which is particularly important for the emerging market and developing countries and can slow down the global recovery. These risks mainly relate to the global economy ongoing adjustment – namely, rebalancing in China, lower prices for commodities and the prospects for a progressive increase in US interest rates”, the IMF report says.
Under the current global environment, with the risk of continued low growth for a long period of time, the WEO Bulletin highlights that policymakers should immediately increase the rate of actual and potential growth through a combination of support of the demand and structural reforms.
Structural reforms, in particular, are still fundamentally important. Countries have different priorities, but many countries with developed economies would benefit from the reforms to increase the participation rate in the labor force (in Japan and the euro area) and total employment levels (due to the aging of the population), as well as from the measures to address the over-indebtedness of the private sector, IMF wrote.
Policymakers in the emerging markets and developing countries shall shift into new sources of growth. Increasing growth rates shall ensure further approximation to the advanced economies’ income levels.
These countries shall also continue structural reforms to eliminate bottlenecks in infrastructure, promote a dynamic and conducive to innovation business environment, and develop a human capital through the reforms of education and labor and product markets, the report says.