IMF report: China's medium-term growth forecast dips

The International Monetary Fund boosted China's near term economic forecast upward on Thursday, but lowered medium-term outlook due to rising vulnerabilities.

China's GDP growth will remain relatively strong in the short run, the IMF said in the renewed report for regional economic outlook in Asia.

The IMF report said the nation's economic outlook for this year improved by 0.1 percentage point compared to April's forecast, anticipating 6.6 percent growth in 2016.

The growth forecast for next year, which is 6.2 percent, remained unchanged, according to the report.

By comparison, Asia's growth as a whole is expected to increase by about 5.4 percent this year and the next, the IMF said.

The Fund noted achievements and progress made by China amid economic transformation to a more sustainable growth model, where growth in the services sector was robust.

Industrial activity was also broadly stable, the report said.

However, rising vulnerabilities caused the Fund to trim the medium-term growth forecast to 5.8 percent, which is 0.4 percentage points lower compared to April' s forecast.

The IMF highlighted rising risks for the economy once efforts to press ahead with reform are deterred, attributing the lowered medium growth forecast to "rising vulnerabilities and slower progress on reining in credit growth and on state-owned-enterprise reform."

The Fund suggested more urgent efforts are needed by the government to rein in credit growth and stop supporting unprofitable state-owned enterprises.

For the first time, the Fund suggested the nation to leave the GDP growth targets off, if needed, in order to better press ahead with reforms, said Alfred Schipke, the IMF's senior resident representative in China.