BEIJING, June 14 (Reuters) - The International Monetary Fund on Wednesday raised its forecast for China's economic growth this year to 6.7 percent, citing "policy support, especially expansionary credit and public investment".
The forecast was an increase from its already-raised April forecast of 6.6 percent.
China's economy grew a faster-than-expected 6.9 percent in the first quarter, well above the government's target of around 6.5 percent for the full year.
The IMF said it now expects China's growth to average 6.4 percent from 2018-2020. In April, the fund said it expected 2018 growth to be 6.2 percent.
Despite the improved growth forecast, the IMF recommended China speed up reforms to transition its economy to more sustainable growth and adopt less accomodative monetary policy.
"The critically important recent focus on tackling financial sector risks should continue, even if it entails some financial tensions and slower growth," the IMF said in a release.
China should also resume progress towards a flexible exchange rate, the IMF said, while adding that it assesses the yuan currency to be "broadly in line with fundamentals". (Reporting by Judy Hua and Elias Glenn; Editing by Kim Coghill)