The head of the International Monetary Fund (IMF) on Wednesday said China had halted government support for the economy “perhaps a bit prematurely”, given the disruptions caused by the coronavirus pandemic.
Consumption in China has not picked up the way it should to compensate for the effects of the virus, IMF managing director Kristalina Georgieva said.
On the positive side, Georgieva said, China has the “fiscal space” to boost its economy to get to 5% growth.
“The People’s Bank of China actually did take some steps in that direction and I would expect that with the picture being what it is, there will be more to come,” she said.
Inflation in the US is expected to decline in the second quarter of this year, Georgieva said.
“This is subject to dealing with supply chain constraints, and what we are seeing are some promising signs that some progress is being made in that regard,” Georgieva told CNBC.
The US consumer price index surged 7% in the 12 months to December, the biggest year-on-year increase since June 1982, the US Department of Labor reported on Wednesday.
- Reuters with additional editing by George Russell
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