Ongoing trade tensions with no resolution in sight have forced the IMF to revise China’s economic growth forecast for 2019. IMF has cut back China’s forecast for this year from 6.3% to 6.2%.
It has also cut down next year’s growth forecast from 6.1% to 6.0%. Surprisingly, only two months ago, the IMF had revised the growth estimates higher, over optimism that US and China were close to finalizing a trade deal.
According to IMF Deputy Managing Director David Lipton, “The near-term outlook remains particularly uncertain given the potential for further escalation of trade tensions.”
On the bright side, however, the IMF believes that the stimulus measures undertaken by the Chinese government are sufficient to stabilize growth in 2019 and 2020. If there are no additional tariff hikes announced, no additional policy easing measures would be needed to maintain growth.