IMF on Global Financial Stability (Photo : Getty Images)
Due to the strong momentum of the Chinese economy last year, the International Monetary Fund (IMF) has raised its growth forecast for China's economy in the next two years, the Xinhua News Agency reported.
China's economy is expected to grow 6.6 percent in 2017 and 6.2 percent in 2018, which are 0.1 percentage point and 0.2 percentage point higher than its forecast in January, according to IMF's latest World Economic Outlook.
According to the IMF, the upgrade is a reflection of the strong economic growth of China in 2016 and the country is expected to continue its growth, supported with policies.
As the outlook on Chinese economy is strong, the IMF has also raised the global growth forecast for next year. The global economy posted a growth of 3.5 percent this year, an increase of 0.1 percentage point from the projected growth in January.
"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 was quoted as saying.
Obstfeld added that China is continuing its process of rebalancing accounts as shown by the decline in current account surplus and the increase in the share of services in the country's gross domestic product (GDP).
The IMF, however, warned the country to implement measures to curb risks that are caused by rising credit.
It also cautioned China about protectionist policies adopted by countries, such as the U.S., which could further drive capital outflows that could affect financial conditions in the country and the economy, in general.
In January, the IMF warned of risks to China's economy that may be caused by a sharp slowdown or disruptive adjustment, as it urged the government to tackle the high corporate debt worsened by capital outflows.
The country's corporate debt has reached 169 percent of its GDP, which international financial institutions fear could lead to a financial crisis.
China's leaders, however, pledged that they would address the financial risks this year and limit the corporate debt ratio at current levels.