The global economy is in “tepid” recovery and China’s deliberate slowing down of economic growth will not lead to a “hard landing”, the managing director of the IMF said yesterday.
The IMF last month lowered its forecast for global growth to 3.4 per cent for this year and 3.6 per cent for next year, partly owing to the Chinese slowdown, lower commodity prices and strains in large emerging market economies. The world economy grew by 3.1 per cent last year.
“It is growth, but it is tepid growth because the recovery we see in the United States, in Europe and little bit in Japan could be … bigger,” said Christine Lagarde at a forum in Dubai.
China’s policy of transition from an export-led to a consumer-led economy has created its economic slowdown, where it will grow by 6.3 per cent this year and 6 per cent next year, according to IMF projections. The Chinese economy grew by 6.9 per cent last year.
“We, the IMF, don’t believe China is going to have a hard landing. We see it as a deliberate transition. It is also a big transitional business model essentially moving from heavy manufacturing to lighter manufacturing and a lot of more services, moving from investing to much more consuming and being a bit less predominately export-driven.”
The US economy grew by an anaemic 0.7 per cent in the fourth quarter last year, below the 2 per cent rate of growth in the third quarter. In the eurozone area, growth was just 0.3 per cent in each of the final two quarters of last year.
Besides India, “the other emerging market economies are either slowing down deliberately like China or are in a pretty weak position”, said Ms Lagarde.
China’s economic slowdown has affected commodity prices, which are in a free fall.
dalsaadi@thenational.ae
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