Rising debt adds to risk

  • The GDP estimate of growth to 2020 has been raised to 6.4% from 6.0% previously (last year).
  • Household, corporate and govt debt will increase to almost 300% of GDP by 2022 from 242% last year. That is the risk to the growth scenario
  • Lending to the private sector increased 16% in 2016. This is twice the pace of nominal GDP growth.
  • Chinas current account surplus, fell 1% to 1.7% of GDP last year on stronger domestic demand. IMF estimates it will fall to 1.4% of GDP this year.
  • For more sustained growth the IMF says China must boos consumption and reduce its high savings rate. The savings rate in China is 46% of GDP and it is twice the global average.
  • IMF also says China needs to increase productivity. Better productivity could increase growth by 1% over the long term