A FULL-BLOWN recessionary crisis prompted by the Eurozone would cause China’s GDP growth to collapse by half, the IMF warned yesterday.
The global bailout body urged Chinese authorities to defer any reduction in government spending, and instead target a deficit of around two per cent of GDP.
And in the event of a global recession China “should respond with a significant fiscal package, executed through central and local government budgets”, the IMF said.
Taking the World Economic Outlook’s worst case scenario of a 1.75 percentage point global economic contraction, China’s growth would fall by around four percentage points, the IMF expects.
Yet if shocks are avoided, the IMF predicts Chinese growth slightly above eight per cent.
