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IMF Predicts China to Surge, Yet Again, Next Year

President Donald Trump talks with IMF Managing Director Christine Lagarde during the Gender Equality Advisory Council breakfast during the G-7 summit, Saturday, June 9, 2018, in La Malbaie, Canada. (Justin Tang/The Canadian Press via AP)

Eric Zuesse

The IMF now predicts that China next year will have the highest rate of economic growth since 2011, which was the last time when China’s GDP growth-rate exceeded 9% (at 9.6%). China’s growth-rate had averaged around 9% between 1978 and 2011, then slid to around 6.5%. If the IMF is correct, then 2021 will be the first time in a decade that the country’s GDP growth-rate is restored to its former long-time norm.

On April 14th, the IMF’s “World Economic Outlook, April 2020” stated that, “the global economy is projected to contract sharply by -3 percent in 2020, much worse than during the 2008-09 financial crisis.” The “Executive Summary” makes no mention, however, of either “recession” or “depression.” This is because the IMF predicts that the coronavirus-19 economic impact will end this year. Their projections call for the best performance being in “Emerging Market and Developing Economies” (the group that includes China) which grew at +3.7% in 2019, to grow at -1% this year, and at +6.6% in 2021. Among Advanced Economies,” the U.S., which grew at +2.3% in 2019, is projected to grow at -5.9% this year, and +4.7% in 2021. The Euro Area, which grew at +1.2% in 2019, is projected to grow at -7.5% this year, and +4.7% in 2021. Each of the two countries, UK and Canada, grew at around +1.5% in 2019 and is projected to grow at around -6.3% this year, and +4.1% in 2021. Japan grew -0.7% in 2019 and is projected at -5.2% now, and +3.0% in 2021. China is projected  at: +6.1%, +1.2%, and +9.2%. Other main “Emerging Market and Developing Economies” are: India, at +4.2%, +1.9%, and +7.4%.’ and Russia, at +1.3%, -5.5%, and +3.5%.

Also on April 14th, I headlined “Why at Least America Will Be in Another Great Depression”, and closed:

On April 13th was the announcement that “Morgan Stanley warns that a potential second wave of infections could strike around November/December”. The firm said “We believe the path to re-opening the economy is going to be long. It will require turning on and off various forms of social distancing and will only come to an end when vaccines are available, in the spring of 2021 at the earliest.” How will it then be possible to avoid a Second Great Depression? Will the Fed be able to continue printing money without limit? Would an immense financial crash be avoided even if it can? The realistic outlook now appears to be super-grim. Perhaps sooner than anyone now expects, every investor will start selling into paper investment-markets that suddenly have no buyers at anything like today’s prices.

If that does turn out to be the case, then America’s crash would negatively impact other nations’ economies, and therefore even China won’t be likely to grow at anything like +9.2% in 2021. For the entire globe, the IMF’s “World Economic Outlook” is predicting that the growth-rate, which was +2.9% in 2019, will be -3.0% this year, and +5.8% in 2021. So, according to the IMF, the rate of growth globally will be twice as high in 2021 as it was in 2019; and, supposedly, the coronavirus impact on the global economy is just a one-year blip, instead of likely to affect the global economy over a longer term.

(For comparison: America’s total economic contraction during the first three years of the First Great Depression, 1929-31, was from a GDP of 103.6, down to 76.5, or -26%, and that was only the start, the nadir being -46% in 1933.)

The IMF paints an optimistic picture of what’s now happening. I don’t think that this is realistic. Of course, only time will tell whether the IMF’s predictions were based on sound assumptions, or whether (as I believe) the global impact of the coronavirus-19 plague will be long-lasting, instead of merely a one-year blip (as they think).

Above all, I believe that the impacts which this plague will have on global supply-chains, and on the distribution of wealth (concentrating wealth even more amongst the billionaires, as is especially likely in the U.S.) will be enormous and fundamental, producing major changes for perhaps a decade to come, and perhaps affecting also the balance of power amongst the world’s nations. But, of course, only time will be able to tell. If the IMF’s latest forecasts turn out to be as inaccurate as I expect, then existing economic theory is (and finally ought to be generally recognized to be) trash. Economists’ forecasts have in the past turned out to be no better than the mere guesses of non-economists, and existing economic theory itself will therefore need to be rejected and fundamentally replaced if this phenomenon occurs yet again after the coronavirus plague. A consistent bad record of prediction cannot characterize any authentic science.

—————

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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Olivia Kroth
April 16, 2020

Although I do not trust the IMF at all, I also think that China’s economy will surge further. It is a very industrious nation.

SteveK9
SteveK9
April 16, 2020

I’m afraid we are going to be trapped with the idiotic social distancing … forever. There is always a new bug. Never mind that modern societies survived quite well for hundreds of years, without this nonsense. Our societies have officially been destroyed. You cannot tear people’s psyche’s apart like that, and then do it again, without changing those people forever.

Black Picard
Reply to  SteveK9
April 17, 2020

This Corona thingy was a dry run. The masses totally caved in when the state machinery told them to stay home. I sense bureaucrats will become more emboldened in the future. A very slippery slope indeed. Pandora’s box has opened & the people will never get their “liberty” back from the State.

Black Picard
April 17, 2020

then America’s crash would negatively impact other nations’ economies, and therefore even China won’t be likely to grow at anything like +9.2% in 2021. — The world really needs to unlink itself from toxic US global dollar cronyism. I mean, look at sub-Saharan Africa for instance. Most people there are so ignorant about the fact that US dollars are printed like toilet paper but offloaded onto the world to buy actual physical things of value. Quite a bold exceptional scam if u ask me. Sadly, most inhabitants in Africa really believe America is “wealthy” even though they have so much… Read more »

Richard Anderson
Richard Anderson
April 17, 2020

A great photo capture. Two very corrupt and very incompetent ‘leaders’ on the world stage. Pretty ghastly doncha think.

Black Picard
Reply to  Richard Anderson
April 17, 2020

My sentiments exactly. I pride myself on being a quick judge of character when interacting with people.

From looking at Lagarde’s bemused facial expression, you can tell she’s probably thinking:
“How on Earth did u — a reality TV show buffoon & philandering womanizer — win that fcuking rigged election in 2016? We expected Killary (sorry, Hillary!) Clinton to be President – not u! Even worse, our fake RussiaGate investigations didn’t get u impeached. Who the fcuk ARE u? Please, just go away!” 😉

Vera Gottlieb
Vera Gottlieb
April 17, 2020

We might as well face it…China is the next “empire”.

Olivia Kroth
Reply to  Vera Gottlieb
April 18, 2020

I am glad this is so. And I hope that China will be joined by Russia. Two eastern empires will save the world.

Glaucio Sombra
Glaucio Sombra
April 21, 2020

YOU CAN WORK ON A RECESSION AND MAKE IT A SURPLUS… GROWTH REGISTERED ONLY ON SUCCESS? PRINTING MONEY… FOR INSTANCE. AND THERE IS REAL GAIN…

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