Diners enjoy local cuisine at a scenic spot in Nanjing, on Oct 7, 2020.(Photo: agencies)
The International Monetary Fund has predicted that China's economy will expand by 1.9 percent this year, nearly double the rate forecast in June, and the country is expected to continue to lead the global economic recovery with robust production and a solid services sector rebound, economists said on Wednesday.
China continues to be the only major economy to show positive growth in 2020 and its GDP growth is expected to reach 8.2 percent next year, according to the World Economic Outlook released by IMF on Tuesday.
The projection came as China is expected to release its third quarter economic data next week.
Some economists have forecast that China's GDP growth rate is likely to pick up to above 5 percent following a strong rebound of 3.2 percent in the second quarter.
The IMF projected in its latest report that global growth is likely to contract by 4.4 percent in 2020, a "less severe" scenario than projected at the end of the second quarter. The organization also said that the United States will see a 4.3 percent contraction in its GDP this year, compared with an 8 percent contraction forecast in June.
But the US rebound in 2021 is expected to be 3.1 percent, 1.4 percentage points below the earlier projection.
"We are projecting a somewhat less severe though still deep recession in 2020, relative to our June forecast," the IMF said in its latest quarterly forecast.
"The revision is driven by second quarter GDP outturns in large, advanced economies, which were not as negative as we had projected; China's return to growth, which was stronger than expected; and signs of a more rapid recovery in the third quarter," it said.
In its June World Economic Outlook update, the IMF projected China's economy would grow by 1 percent. In the October forecast, it said GDP results for the second quarter were better than expected in China, where, after lockdowns eased in early April, public investment helped boost activity to return to positive growth in the second quarter.
China's GDP expanded 3.2 percent year-on-year in the second quarter, reversing a contraction of 6.8 percent in the first quarter, according to the National Bureau of Statistics.
The IMF is not the only international organization that has raised its forecast for China. The World Bank said in its latest report that China's economy is expected to grow by 2 percent in 2020, up from the 1 percent growth projection released in June. Other rating agencies have also revised up their forecast on China's GDP growth this year, to 1.9 percent for Moody's and 2.7 percent for Fitch. The two agencies expected China to be the only major economy to see growth expansion this year.
The Foreign Ministry said on Wednesday that the steady recovery of the Chinese economy and the country's full resumption of production have helped stabilize global supply chains and effectively boosted global demand. China will continue to build an open economy and is willing to boost economic policy coordination with other countries to contribute to stabilization and recovery, the ministry said.
Economists at Standard Chartered Bank said that China's GDP growth in the third quarter is likely to have risen to 5.5 percent year-on-year. "Following a V-shaped rebound in Q2, led by the manufacturing sector, growth sustained momentum in Q3 as the services sector caught up. The purchasing managers subindex for services climbed to 55.2 in September, the highest reading since June 2012," they said in a research note.
"Pent-up demand boosted domestic tourism, supporting the catering and accommodation sectors. Supportive measures helped to stabilize the labor market, boosting consumer confidence," they added.
The Brookings Institution, in an update to its Tracking Indexes for the Global Economic Recovery published on Sunday, also said China has led the global recovery, with both the industrial and services sectors revived, and many indicators of economic activity already above pre-COVID levels.
The IMF's latest report said that global trade began recovering in June as lockdowns were eased, with China being an important contributor.
Zhu Min, head of Tsinghua University's National Institute of Financial Research and a former deputy managing director of the IMF, said that China is expected to be the only country to have positive GDP growth this year, and for the next two years the country is likely to maintain a growth rate of 10 percent compared with the base in 2019. He added that China will increase its contribution to global economic growth, which could potentially further change the global economic structure.
The senior economist warned that uncertainties of global economic growth are increasing as some countries begin experiencing the second wave of COVID-19 infections recently. He noted that many countries have exhausted their stimulus packages of fiscal and monetary measures, and facilitating an economic recovery will be challenging in the next step.