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China Pulled Plug on Economic Recovery Too Soon, Says IMF Chief

Consumption has not picked up the way it should to compensate for effects of the virus, IMF managing director Kristalina Georgieva said


China Covid
China is still fighting a Covid-19 outbreak in Xi'an. Photo: Reuters.

 

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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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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