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CCTV Script 25/07/17


— This is the script of CNBC's news report for China's CCTV on July 25, Tuesday.

Two main revisions emerged from the IMF's newest update. The first is a major decline in U.S growth forecast and the second being a minor bump up for China's growth forecast. In the IMF's newest update, the US 2017 growth forecast was revised down by 0.2 percentage point, while the 2018 US growth forecast was lowered by 0.4 percentage point, resulting in US to grow at 2.1% for both years. According to IMF, these numbers were lowered as a result of a multitude of events such as the lower-than-expected fiscal expansion package that the Trump's administration promised, alongside Fed's tightening of monetary policy such as imposing a rate hike and reducing its massive balance sheet. As such, the uncertainty of America's fiscal and monetary policies had mounted pressure on the growth of the American economy.

In fact, in the Article IV Consultation with the United States released last month, IMF had already lowered US growth forecast. Furthermore, similar to what was previously announced, America's GDP, in the long-term, is set to grow at 1.8%.

A noteworthy point is that America, a developed country, is the only G7 country to see its 2017 and 2018 growth forecast being lowered.

[MAURICE OBSTFELD, IMF Economic Counsellor & Director of Research] "I would look the FED to be cautious in the short term. We have not seen any inflation pressure. if we look at long term expectations in the US, they are pretty well anchored at 2% target. So caution is going to be a word, its been a consistent pattern for a long time."

Besides, the IMF raised China's growth forecast for 2017 by 0.1 percentage point to 6.7%, citing a stronger-than-expected first quarter. For 2018, IMF raised China growth forecast by 0.2 percentage point to 6.4%. Not only do these numbers reflect China's strong economic growth, it also showed that the continued fiscal support by the government has largely benefitted the economy. However, IMF stressed that China should moderate its excessive credit growth.

[MAURICE OBSTFELD, IMF Economic Counsellor & Director of Research] "Chinese authorities also seem to be concerned and they have been talking about increasingly. they recently moved to centralise their monetary and their financial oversight under the PBOC and the State Council. So they seem to be moving in the right direction and everyone recognises it. It is definitely not a sustanaible proposition to keep credit growing the way it has."

Now, let's take a look at the growth forecasts of developed and developing countries. For developed countries, its growth forecast was at 2%, unchanged from IMF's April Report. However, for 2018 April, IMF forecast it to drop by 0.1 percentage point, to 1.9%. Furthermore, following weaker than expected first quarter economic performance and the eventual impact that Brexit would bring to the economy, IMF slashed UK 2017 growth forecast by 0.3 percentage points, to 1.7% growth. As for its 2018 growth, it was forecast to remain unchanged at 1.5%. The Eurozone, as a whole, is observing a positive economic outlook as countries France, Germany, Italy and Spain experienced a stronger-than-expected first quarter growth. Therefore, IMF raised the Eurozone's 2017 growth forecast by 0.2 percentage points. Continuing this upward trend, IMF also raised Japan's growth forecast by 0.1 percentage points. At the same time, it also bumped up the growth forecast of developing countries by 0.1 percentage points to 4.6%, with their 2018's growth forecast remaining unchanged at 4.8%.

Yet IMF also warned of various risks such as trade protectionism policies, Brexit and the uncertain political climate of Middle East that might dampen the market's confidence, curb investments and prevent the economy from growing.

CNBC's Qian Chen, reporting from Singapore