When The Hockeystick Breaks: The IMF Gives Up On China Growth

Earlier we showed that despite its 16th cut to world GDP growth forecasts (out of the past 21), the IMF still believes that the hockeystick rebound to global growth is just around the corner:


However, one place where not even the IMF can in good conscience predict a hockeystick-like rebound in growth, is China, where the IMF now expects GDP to grow only 6.3% in 2016, dropping to an even lower 6.0% in 2017.

This is what the IMF warned about the risks to its overall outlook, which not surprisingly are focused on China:

Looking beyond the short-run forecasts, there are important risks to the outlook, which are particularly prominent for emerging market and developing economies and could stall global recovery. These risks relate mostly to the ongoing adjustments of the global economy, namely China’s rebalancing, lower commodity prices, and the prospects for the progressive increase in interest rates in the United States.... A sharper-than-expected slowdown in China... could bring more international spillovers through trade, commodity prices, and waning confidence.

So, at least according to the IMF, China is not "contained", contrary to what former Fed Chairman Ben Bernanke said overnight.  And this is what China's growth looks like: after predicting the usual hockeystick rebounds in 2011, 2012 and 2013, over the past few years the IMF has clearly admitted that there simply will be no rebound as the following lack of hockeystick chart now admits:


For those wondering what is the reason for the lack of a Chinese hockeystick, the answer is simple: the diagonal move in China's debt, which even the IMF is now forced to admit will serve like an ever more constrictive vise on the Chinese economy, as it is growing at more than double the rate of China's GDP growth, which has quadrupled over the past 7 years, and which is as of this moment somewhere around 300% of China's GDP.

Until this particular hockeystick is somehow resolved, don't expect a return to the global growth rates recorded over the past decade.