The World Bank has further trimmed its growth forecast for China, for this year and next, citing the impact of the abrupt relaxation of the country’s zero-Covid regime and the ongoing downturn of its real estate market.
In a report released on Tuesday, the Washington-based lender predicted that China’s economy will expand 2.7% in 2022 before rebounding to 4.3% in 2023. That’s down from a September forecast by the bank, which said the world’s second-largest economy would grow at 2.8% this year and 4.5% the next.
The World Bank forecast is considerably below China’s official growth target of about 5.5%.
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Analysts have cautioned that more than a million people could die of Covid in China in the coming months due to the rapid removal of important controls that had kept the pandemic in control so far.
“China’s growth outlook is subject to significant risks, stemming from the uncertain trajectory of the pandemic, of how policies evolve in response to the Covid-19 situation, and the behavioural responses of households and businesses,” the bank said in its report.
The lender also cautioned about domestic and global risks facing China. “Persistent stress in the real estate sector could have wider macroeconomic and financial spillovers,” it said.
China also faces highly uncertain global growth prospects and heightened geopolitical tension, the bank added. China’s exports and imports fell to their lowest levels in more than two years in November amid weak global and domestic demand.
The country is also battling an ongoing chip-war with the US, which will likely cause a significant setback to its tech industry.
Chinese leaders have pledged to step up policy adjustments to support the slowing economy and to cushion the impact of a surge in Covid infections on businesses and consumers.
- Reuters, with additional editing by Vishakha Saxena
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