IMF says may raise China 2017 GDP forecast again
WASHINGTON, April 21 (Reuters) - China's economy may grow faster than the International Monetary Fund (IMF) had expected for all of 2017 after a first-quarter performance that beat forecasts, the fund said, as it urged Beijing to address entrenched financial risks in the country.
Data this month showed China's economy grew at a faster-than-expected rate of 6.9 percent in the first three months of this year after record credit growth, a gravity-defying property boom and higher government infrastructure spending juiced activity. The better-than-anticipated data prompted the IMF this week to raise its 2017 and 2018 growth forecasts for the Chinese economy, and Changyong Rhee, director of the Asia and Pacific Department at the fund, said on Friday there was a chance it may lift its 2017 estimate again. The IMF, which holds its spring meeting this week for central bankers and finance ministers, lifted its 2017 growth projection for the Chinese economy, the world's second largest, to 6.6 percent from 6.5 percent on Tuesday.
"There is upside risk to our current projection," Rhee told reporters at a briefing.
But at the same time, the fund said it expects certain parts of China's economy, including its real estate market and its shadow banking sector, to cool in the second half of this year.
The fund said it has always advised China that the country's financial trends are "dangerous and unsustainable".
These include an "excessive" role of the state, large resource miscalculation in many areas, state-owned companies that lack budget constraints and financial discipline, said Markus Rodlauer, deputy director of the Asia and Pacific Department at the IMF.
"When this would unravel in some way or another, nobody can predict," said Markus Rodlauer, deputy director of the IMF's Asia and Pacific Department, adding the fund was hopeful that China could untangle its problems.
China's debt-to-GDP ratio rose to 277 percent at the end of 2016 from 254 percent the previous year, with an increasing share of new credit being used to pay debt servicing costs, according to an estimate from UBS.
(Reporting by Koh Gui Qing; Editing by Chizu Nomiyama)