Forecast of China’s Economy During 2016–2017

Abstract

In 2016, the huge volatility in the international financial market, the Eurozone and Japan’s negative interest rates policy, as well as the expectation of China’s economic slowdown led to a huge increase in the uncertainty about US economic growth. This is likely to slow the pace of interest rate increases in the US and inhibit the appreciation of the dollar, and also make predicting the US economy extremely difficult. According to the latest IMF forecast (January 19, 2016), the rate of US economic growth in 2016 and 2017 will grow by 2.6 %, 0.2 percentage points lower than the IMF prediction in October 2015. Although the easing financial conditions and the decreasing international oil prices will have a positive impact on the economic growth in the euro area through the consumption channel, the risk to Greece’s and other Eurozone members’ economic growth cannot be ignored. According to the latest IMF prediction, the Eurozone will grow by 1.7 % in 2016, 0.1 percentage points higher than the forecast in October 2015. Economic growth in 2017 is expected to continue at 1.7 % (see Fig. 2.1).