The World Bank reduced its China growth forecast for the year as the pandemic and weaknesses in the property industry affected the world’s second-largest economy, according to the news agency AFP.
The World Bank reduced its projection to 2.7% from 4.3% in June, according to an official statement. It also dropped its forecast for next year from 8.1% 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.
China dramatically dropped its zero-Covid policy last month, after three years of sudden lockdowns, mass testing, lengthy quarantines, and travel restrictions. However, commercial interruption has remained as the number of Covid cases has increased, and some limits remain in place.
“Continual adaption of China’s Covid-19 policy will be critical, both to manage public health concerns and to prevent additional economic dislocation,” said Mara Warwick, World Bank Country Director for China, Mongolia, and Korea.
It went on to say that ‘chronic stress’ in the real sector, which accounts for roughly a quarter of yearly GDP, might have wider macroeconomic and financial impacts. It continued by stating that the hazards of extreme weather induced by climate change, as well as the broader global recession, posed a threat to growth.
The downturn in China comes as the global economy is hit by increasing interest rates aimed at tackling runaway inflation that has been generated by Russia’s war in Ukraine as well as global supply chain growls.