IMF upgrades China's growth forecast in 2017 and 2018

The International Monetary Fund (IMF) on Tuesday upgraded its forecast for China's economic growth in 2017 and 2018, reflecting the stronger-than-expected momentum of the Chinese economy in 2016.

In its latest World Economic Outlook, the IMF expects the Chinese economy to grow 6.6 percent in 2017 and 6.2 percent in 2018, 0.1 percentage point and 0.2 percentage point higher than its forecast in January.

The upward revision reflects the stronger-than-expected momentum of the Chinese economy in 2016 and the anticipation of continued policy support, said the IMF.

With the strong outlook for the Chinese economy, the global growth forecast for 2017 was also raised. The IMF expects the global economy to grow 3.5 percent this year, up 0.1 percentage point from its January projection.

"This improvement comes primarily from good economic news for Europe and Asia, and within Asia, notably for China and Japan," IMF chief economist Maurice Obstfeld said.

China's rebalancing process continues, as seen in a declining current account surplus and an increasing share of services in its gross domestic product (GDP), said Obstfeld.

However, the IMF suggested China take measures to address the growing vulnerabilities associated with the rapid credit expansion.

It also warned that protectionist measures adopted by advanced economies could lead to a broader tightening of financial conditions in China, possibly exacerbated by capital outflow pressure, which could have an adverse impact on the Chinese economy.