China PMI Batters Global Markets…Are you kidding me?
IMF Blog, February 3, 2014
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Bibliographic details
- Authors: rising net exports fueled by the global recovery.
- Published: February 3, 2014
Main argument
- Media accounts linking a small decline in China’s Purchasing Managers’ Index (PMI) to a global market slide are likely overstated.
- China’s PMI is a useful—but not definitive—indicator for growth; January and February PMI data are hard to interpret because of the Lunar “Chinese” New Year.
- The PMI decline crossed the expansion/contraction threshold but was “rather small.”
IMF forecast and growth projections
- The IMF raised its forecast for China’s growth in 2014 from a “7¼ percent” projection made in October to “7½ percent.”
- Published 2013 data showed “7.7 percent” annual growth, which matched IMF expectations.
- The IMF reaffirms the forecast for “7½ percent” growth in 2014.
- The IMF projects a moderate slowing in China’s economy, specifically “a slowing of domestic demand—over ½ percentage point—partly offset by rising net exports.”
- Embedded in IMF forecasts is a slowing of growth by “0.2 percentage points.”
- The IMF estimates a plausible long-run “fastest sustainable growth rate” of around “6 percent on average between now and 2030.”
Drivers and interpretation
- Domestic demand momentum and an improved outlook in advanced economies could lift growth above current forecasts.
- Government implementation of a recently announced economic blueprint is expected to moderate domestic demand.
- Containing risks from rapidly expanding credit and rising local government debt will put the economy on sounder footing but will be “a modest drag on domestic activity.”
- Rising net exports, fueled by the global recovery, are expected to partly offset weaker domestic demand.
Policy implications and assessment
- The modest slowdown is characterized as “welcome” as China shifts toward more inclusive, green, and sustainable growth.
- The tradeoff of slightly lower near-term domestic activity is viewed as positive for securing long-term growth.
Key statistics and figures
- IMF membership: “191 countries.”
- 2013 annual growth: “7.7 percent.”
- IMF 2014 forecast (reaffirmed): “7½ percent.”
- Prior October projection for 2014: “7¼ percent.”
- Projected slowing embedded in forecasts: “0.2 percentage points.”
- Slowing of domestic demand buried in forecasts: “over ½ percentage point.”
- Estimated fastest sustainable growth rate to 2030: “6 percent on average between now and 2030.”
Source: IMFBlog article "China PMI Batters Global Markets…Are you kidding me?" by Steven Barnett, February 3, 2014.
Content in this bundle
- 中国的采购经理人指数（PMI）冲击全球市场…开什么玩笑; iMFdirect博客； 2014年2月3日
