As the people of China face the specter of a long and cold winter, there is more bad news for the Chinese economy as the International Monetary Fund (IMF) lowered China’s growth for next year to 5.6 per cent. However, India will be the fastest-growing economy in the world in 2022 at 8.5 per cent.
In April this year, the IMF had forecasted China’s growth at 8.4 per cent, however, IMF lowered China’s growth for this year citing “large-scale disorderly corporate debt defaults or restructuring”. But the IMF is very optimistic on India as its GDP will grow at 9.5% in 2021 And 8.5 per cent in 2022, and will be have the bragging rights to be the fastest-growing economy.
The IMF added that “China’s property sector could reverberate widely” but with the recent revelation of coal and power shortages including the 300 billion dollars Evergrande property crisis, taking a more lenient view, the IMF said, “China’s prospects for 2021 are marked down slightly due to stronger-than-anticipated scaling back of public investment,”.
It is indeed very bad news for the global economy as many economists are predicting another financial crisis even worst than the 2008 collapse of Goldman Sach because in April, the IMF was looking at China’s growth this year at 8.4 per cent and it has lowered China’s growth for next year to 5.6 per cent due to “stronger-than-anticipated” pullback in public spending in China leading to growth going on a downward spiral.
As per the IMF projection, the global economy would to grow at 5.9 per cent in 2021 and 4.9 per cent in 2022 which is 0.1 percentage points lower for 2021 than the July forecast. However, India’s economy is expected to grow by 9.5 per cent in 2021 and 8.5 per cent in 2022.
“The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics,” Gita Gopinath, chief economist of the IMF, said.
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