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By Sangam Singh Dec 20, 2022 11:20:07 AM IST (Published)
The World Bank's figures are below Beijing's stated GDP growth target for this year of around 5.5 percent. In December, China abruptly abandoned its zero-Covid policy after months long. Despite this, the disruption to businesses has continued as cases surge.
The World Bank slashed China's growth forecast to 2.7 percent from 4.3 percent for this fiscal year citing Covid lockdowns across cities and weaknesses in the real state sector. It also revised its forecast for next year from 8.1 percent to 4.3 percent.
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"Economic activity in China continues to track the ups and downs of the pandemic outbreaks, and growth slowdowns have been followed by uneven recoveries," the World Bank said in a press release.
"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." The World Bank's figures are below Beijing's stated GDP growth target for this year of around 5.5 percent.
In December, China abruptly abandoned its zero-Covid policy after months long. Despite this, the disruption to businesses has continued as cases surge.
"Continued adaptation of China's Covid-19 policy will be crucial, both to mitigate public health risks and to minimise further economic disruption," Mara Warwick, World Bank Country Director for China, Mongolia, and Korea, said. "Persistent stress" in the real estate sector, which accounts for about a quarter of annual GDP, could have broader macroeconomic and financial effects, the World Bank noted.
As per the World Bank, extreme weather caused by climate change and the broader global slowdown also threatened China's growth. The global economy is struggling due to surging interest rates aimed at fighting inflation and supply chain constraints after Moscow invaded Ukraine on February 24.
To fight slow growth, China has taken easing measures like slashing key interest rates and pumping cash into the banking system.
"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," said the World Bank's Lead Economist for China, Elitza Mileva.
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