China’s dangerous debt mountain could spark huge GLOBAL COLLAPSE, the IMF warns

Wednesday, August 16, 2017
By Paul Martin

CHINA’S surging debt is a dangerous risk that could plunge its economy into crisis and drag the world down with it, the International Monetary Fund (IMF) has warned.

Wed, Aug 16, 2017

Borrowing in the Asian country has helped drive growth, but this could come at a price later down the line, the fund fears.

The world’s second-largest economy has seen credit surge to around 240 per cent of its economy GDP.

But this is set reach to almost 300 per cent of GDP by 2022, according to the IMF.

Many economies that have previously rapidly built-up high debt levels have ended in disaster.

And now the fund is worried China is heading in the same direction.

In a report on the country’s economy, the IMF said: “International experience suggests that China’s current credit trajectory is dangerous with increasing risks of a disruptive adjustment and/or a marked growth slowdown.”

However, the fund raised the outlook for the world’s second-largest economy.

China’s economy is to grow 6.7 per cent in 2017, and 6.4 per cent between 2018 and 2002, the IMF said.

The Washington-based fund said: “The growth outlook has been revised up reflecting strong momentum, a commitment to growth targets, and a recovering global economy.

“But this comes at the cost of further large and continuous increases in private and public debt, and thus increasing downside risks in the medium term.”

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