(Yicai) Nov. 7 -- The International Monetary Fund has raised its forecast for China's gross domestic product growth this year to 5.4 percent, up from an earlier prediction of 5 percent, it said at a news conference in Beijing.

For next year, the Washington-based IMF now predicts growth of 4.6 percent for the world’s second-largest economy, an increase from 4.2 percent.

The upgrades are partly due to some recent support policies the Chinese government has unveiled, including the issuance of CNY1 trillion (USD137.3 billion) in government bonds for disaster relief and reconstruction, Gita Gopinath, the IMF’s first deputy managing director, said at today’s press briefing.

China’s GDP rose 4.9 percent in the third quarter from a year earlier, higher than the average 4.5 percent forecast by chief economists surveyed by Yicai, putting the country on track to hit its annual economic growth target of “about 5 percent” set earlier this year.

The fund said it was not concerned about deflation in China, as inflation remains in a reasonable range, but it suggested that fiscal policy should be kept relatively neutral next year.

China’s consumer inflation flatlined in September from a year ago, while Yicai’s poll of chief economists had predicted a 0.15 percent increase. In August, the consumer price index rose 0.1 percent year on year, the first increase in three straight months. October’s data is due out on Nov. 9.

New opportunities are likely to emerge given the sound fundamentals of the Chinese economy, according to the IMF. A strong labor force and good environment for doing business are key positive factors, it said, and research, development, and innovation will play a more crucial role in the future. Also, further investment in infrastructure and other government measures can spur new sources of growth, the fund said.

The IMF noted that policies such as building a more effective social security network, deeper reforms of state-owned enterprises, and freer capital flows will also support growth momentum. 

Editor: Tom Litting