China’s Medium-Term Growth Outlook Revised Downward to 5.8% From 6.2% - IMF

WASHINGTON (Sputnik) — The International Monetary Fund (IMF) has revised medium-term outlook for the Chinese economy downward, anticipating 5.8 percent growth instead of originally expected 6.2 percent, according to a report issued by the Fund.

"Medium-term growth has been revised down to 5.8 percent from 6.2 percent, reflecting rising vulnerabilities and slower progress on reining in credit growth and on state-owned-enterprise reform," the report stated on Thursday.

Nevertheless, the IMF said China’s GDP growth would remain relatively strong in the near term, reaching 6.6 percent in 2016 and 6.2 percent in 2017.

In January, IMF Managing Director Christine Lagarde said China had entered the stage of legitimate and crucial economic transition. Given that, some market turbulence should be expected ahead, she noted.

On Tuesday, IMF chief economist Maurice Obstfeld said the Fund has concerns about China’s medium-term economic prospects because stimulus policies pushed by Beijing, such as rapid domestic credit growth and continuing support of sectors with excess capacity, could backfire.

A stronger domestic demand in China is likely to spur import growth in the country IMF also said.

"Both consumption and investment growth have been revised upward, while the contribution of net exports has been revised downward, as import growth is expected to accelerate amid stronger domestic demand," the report stated on Thursday.