World Bank cuts China growth forecast to 2.7%
1 min read . Updated: 20 Dec 2022, 10:45 AM IST
PremiumThe World Bank said that it slashed its forecast to 2.7% from the 4.3% predicted in June. It also revised its forecast for next year from 8.1% down to 4.3%.
The World Bank on Tuesday slashed its China growth forecast for the year as the pandemic and weaknesses in the property sector hit the world's second-largest economy, according to the news agency AFP.
In an official statement, the World Bank said that it slashed its forecast to 2.7% from the 4.3% predicted in June. It also revised its forecast for next year from 8.1% down to 4.3%.
In a press release, the World Bank, "Economic activity in China continues to track the ups and downs of the pandemic -- outbreaks and growth slowdowns have been followed by uneven recoveries."
"Real GDP growth is projected to reach 2.7 percent this year, before recovering to 4.3 percent in 2023, amid a reopening of the economy," it added, as quoted by AFP.
After three years of sudden lockdowns, mass testing, long quarantines, and travel restrictions, China this month abruptly abandoned its zero-Covid policy. However, disruption to businesses has continued as Covid cases surge and some restrictions remain in place.
Mara Warwick, World Bank Country Director for China, Mangolia and Korea said, "Continued adaptation of China's Covid-19 policy will be crucial, both to mitigate public health risks and to minimize further economic disruption."
It further noted that 'persistent stress' in the real sector, which accounts for about a quarter of annual GDP, could have wider macroeconomic and financial effects. It added that the risks from extreme weather caused by climate change and the wider global slowdown also threatened growth.
The slowdown in China comes as the global economy is battered by surging interest rates aimed at fighting runaway inflation that has been triggered by Russia's war in Ukraine as well as global supply chain snarls.
Elitza Mileva, World Bank's Lead Economist for China said that directing fiscal resources towards social spending and green investment would not only support short-term demand but also contribute to more inclusive and sustainable growth in the medium term.
(With AFP inputs)
