IMF's China outlook could affect others

A lowering of China's growth rate for 2015 by the International Monetary Fund could have a big impact on the fiscal outlook for a number of the world's emerging economies, according to a US-based economics expert.

"China's slowing down and rebalancing away from investments has a significant effect on other countries," David Dollar, a senior fellow at the Brookings Institution's John L Thornton China Center in Washington, told China Daily on Tuesday.

"For a long time, China's demand has been driving prices not just of energy but also iron, copper and many other primary products," Dollar said. "Now I think what's going to happen is the demand coming from China is going to be much more muted."

On Monday the IMF released its January 2015 World Economic Outlook (WEO) report, which lowered the global economic growth forecast for 2015 and 2016. IMF projections expect the world economy to expand by 3.5 percent in 2015 and 3.7 percent in 2016, picking up from a 3.3 percent growth figure in 2014.

In the IMF's October 2014 WEO report, global growth was predicted at 3.8 percent (2015).

China's 2014 economic growth edged down to a 24-year low of 7.4 percent from 7.7 percent in 2013, the first time that it missed the government's annual target in 16 years, according to data from the National Bureau of Statistics released on Tuesday.

Zhu Haibin, chief China economist at JPMorgan Chase & Co, said: "The economic slowdown is expected and desirable, as it is driven mainly by a lsowdown in fixed investment, especially in real estate and manufacturing investment, which face oversupply problems."

Growth in China, the world's second-largest economy, is expected to slow further to 6.8 percent in 2015 as its economy reorients toward consumption and away from investment, the IMF said.

The Washington-based organization said a boost from low global crude oil prices would be negated by dim economic outlooks for China, the European area, Japan, Russia and oil producers.

"Global growth will receive a boost from lower oil prices," the IMF said. "But this boost is projected to be more than offset by negative factors, including investment weakness in many advanced and emerging market economies. Slower growth in China will also have important regional effects, which partly explains the downward revisions to growth in much of emerging Asia."

The US is the only major country to have its growth forecast raised by the IMF's 2015 outlook report. It put the 2015 growth estimate at 3.6 percent, up from October's forecast of 3.1 percent.

The gains in the US were buoyed by "lower oil prices, more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance," the report said.

Barry P. Bosworth, an economist with the Brookings Institution, told China Daily that he was "surprised" by the magnitude of the IMF's downgrade for China and the increase for the US.

Chen Jia in Beijing contributed to this story.

jackfreifelder@chinadailyusa.com