China's economy is expected to grow at about 7.5 percent this year with inflation kept below 3 percent, the International Monetary Fund (IMF) said on Wednesday.
Despite slower investment and possible deeper adjustment in real estate activity, measures taken by authorities to support growth are "expected to bring it in line with the annual target of around 7.5 percent," the Washington-based institution said in its annual Article IV Consultation Staff Report for China.
"Consumption and the labor market are holding up well, and the global recovery is expected to support activity going forward. Inflation is forecast to remain below 3 percent," the report added.
Meanwhile, China's external imbalances have fallen, said the IMF, as the current account surplus declined to 1.9 percent of GDP last year.
Executive directors of the Fund agreed that China's growth prospects are threatened by declining efficiency of investment, a significant buildup of debt, income inequality and environmental costs.
"The challenge is to shift gears, reduce the vulnerabilities that have built up, and transit to a more sustainable growth path," said the report, adding that the implementation of China's Third-Plenum reforms will help China achieve more balanced and inclusive growth.