http://www.theaustralian.com.au/business/markets/imf-lifts-forecast-for-chinese-gdp-growth/story-e6frg926-1225857033802
IMF lifts forecast for Chinese GDP growth JR Wu From: Dow Jones Newswires April 22, 2010 4:17PM THE International Monetary Fund lifted its forecast for China's 2011 economic growth to 9.9 per cent, three months after it had forecast 9.7 per cent growth, and suggested Beijing could use exchange rate appreciation to deal with excess demand pressures. While the IMF didn't specifically mention the yuan exchange rate in its latest World Economic Outlook, it indicated that China could also lead the way for other emerging economies if it adjusts its currency policy. The IMF's upward revision of its forecast for China's 2011 gross domestic product growth shows it doesn't expect the pace of China's economic expansion to slow much from the 10 per cent it is predicting for this year. It comes as overheating risks are rising in the world's third-largest economy even as Beijing has begun to gradually wind down the extraordinary stimulus program introduced in late 2008. Economists have urged China to allow the yuan to strengthen much faster to help counter building inflationary pressures - some of it imported due to rising commodities prices on the international market - and temper the risk of domestic asset bubbles worsening. But China is steadfast against outsiders pressuring it about its currency policy. There is persistent market expectations that Beijing is planning to exit the yuan's effective peg to the US dollar, which has been in place since July 2008 to deal with the impact of the global financial crisis. In its semi-annual World Economic Outlook, the IMF said: "In economies with excessive current account surpluses and solid public finances, fiscal exit can wait while excess demand pressures are being addressed by reining in credit growth and allowing exchange rate appreciation. This is essential for China, given its large role in the global market. "Greater currency adjustment in Asia would facilitate adjustment in other emerging economies that may fear losing market share if their currencies were to appreciate alone," the IMF said. China's withdrawal of its "exceptional monetary stimulus will also minimise the risks from excessively easy credit conditions", it said. The report maintained the IMF's forecast for China's 2010 GDP growth, which was revised upward in January from an October projection of 9 per cent. Although it is common for the fund to sharply revise its economic projections in regular updates, its 2010 GDP growth forecast for China puts the IMF ahead of the Asian Development Bank's 9.6 per cent and the World Bank's 9.5 per cent growth estimates. Beijing is officially targeting growth of around 8 per cent for this year. In the first quarter, China's GDP grew 11.9 per cent from a year earlier, its fastest pace since the onset of the global financial crisis. The IMF also raised its inflation forecast for China, as measured by the growth in the consumer price index, to 3.1 per cent for this year, up from its October projection for 0.6 per cent, which puts its forecast in line with the Chinese government's target of keeping CPI growth around 3 per cent for 2010. China's CPI growth will likely slow to 2.4 per cent in 2011, the IMF said. China's current account surplus as a percentage of GDP will likely be 6.2 per cent this year and rise a tad to 6.5 per cent in 2011, the fund said, after hitting 5.8 per cent in 2009. Related Coverage a.. Australia leading the way in recovery Adelaide Now, 3 days ago b.. Dollar flat as IMF heads to Greece The Australian, 9 days ago c.. Bernanke pressures China on yuan The Australian, 10 days ago d.. India could be world's third largest economy The Australian, 27 Jan 2010 e.. Swan welcomes IMF report card The Australian, 26 Jan 2010 [Non-text portions of this message have been removed]
