World Bank cuts China’s growth forecast to 2.7%

In an official statement, the World Bank said it lowered its forecast to 2.7% from 4.3% estimated in June. It revised its forecast for next year down from 8.1% to 4.3%.

“Economic activity in China continues to track the ups and downs of the pandemic – there has been an uneven recovery following the outbreak and a slowdown in growth,” the World Bank said in a press release.

“Real GDP growth is forecast to reach 2.7 per cent this year before rising to 4.3 per cent in 2023 amid the reopening of the economy,” it was quoted as saying by AFP.

After three years of sudden lockdowns, mass testing, lengthy quarantines and travel restrictions, China abruptly abandoned its zero-Covid policy this month. However, disruptions to businesses continue as Covid cases continue to rise and some restrictions remain in place.

“Continued adaptation of China’s COVID-19 policy will be critical to mitigating public health risks and minimizing further economic disruption,” said Mara Warwick, World Bank Country Director for China, Mongolia and Korea.

It further said that the ‘persistent stress’ in the real sector, which accounts for about a quarter of annual GDP, could have wide-ranging macroeconomic and financial implications. It added that the risks of extreme weather caused by climate change and a wider global recession also put growth at risk.

The slowdown in China comes as the global economy is battered by rising interest rates aimed at fighting rising inflation, triggered by Russia’s war in Ukraine as well as global supply chain snarls.

Alitza Mileva, the World Bank’s chief economist for China, said that directing financial 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)