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Chinese Economic Growth Set to Slow Down in 2020

A report from the International Monetary Fund (IMF) suggests that the Chinese economy will grow less next year than it has done in 2019. The information came in the IMF’s World Economic Outlook report.

A Look at the Figures

The report pointed out that Chinese economic growth in 2020 could reach 5.8%. This compares to the 6.1% that is forecast for the current year. In 2018, the rate was 6.6%, according to IMF figures.

The moderation in Chinese growth goes against the general prediction for the global economy to start growing more quickly in 2020 than it has done this year.

Other figures released recently show that the economy in China grew by 6% in the 3rd quarter of the year. This was noted as being the slowest level of quarterly growth seen here since the 1st quarter back in 1992.

What Does This Mean?

Tao Zhang is deputy managing director at the IMF. He was quoted as saying that the predicted rate of growth is still “reasonable”. This is because the country’s authorities are currently attempting to restructure their economy to help it to achieve more sustainable growth in the future. 

He went on to talk about the factors that have added pressure to the economy here. These include trade tensions, geopolitical forces and other “uncertainties around the world”.

Mr Zhang pointed out that it is unreasonable to expect any economy to keep on growing at rates of 7% or 10%. This is why has said that the focus is now on “growth with better quality, higher sustainability”.

The Asian giant is said to be ready to depend less upon debt to create economic growth. Instead, they will be looking to raise domestic consumption levels in order to do this. The idea is that this will lead to a slower growth rate but of better quality.

What about the Rest of the World?

The lower rate in China for 2020 would still see it come out ahead of the overall global growth numbers. This is because the worldwide figure for next year is predicted to reach 3.4%. Earlier studies had suggested that 2020 would see growth of 3.6%, but this number has now been revised downwards.

In terms of 2019, the current slowdown is expected to see this year’s number reach just 3%. This prediction has been lowered during the year, from a figure of 3.3% that was predicted in the spring. In 2018, global growth was registered as being 3.6%.

This low rate of growth, coupled with stagnant interest rates, has dampened the outlooks for businesses. It explains why many companies are now stock-piling for the future, as well as looking into matters like international debt recovery.

The ongoing trade wars between China and the US is stated as being one of the main reasons why this year has seen sluggish economies all over the planet. The IMF has classified the sluggishness noted in many different countries as a “synchronized slowdown.”