World Bank Significantly Lowers Growth Forecasts for China

The World Bank has significantly lowered annual growth forecasts for China. It reported Wednesday (June 8) that the disruption caused by COVID-19 could further slow the recovery of the world’s second-largest economy.

China is the last major economy to adopt a zero COVID policy. The country tried to prevent the outbreaks with a quick lockdown, lots of testing, and strict movement restrictions. But in doing so, China has disrupted supply chains and pushed economic indicators to their lowest levels in two years.

The World Bank said that growth in China is expected to slow to 4.3% by 2022, a significant 0.8% decline from its December forecast.

In recent months, restrictions have been imposed in several cities, including Shenzhen, the technology center, and Shanghai, the financial metropolis.

“In the short term, China faces the dual challenge of balancing COVID-19 mitigation with supporting economic growth,”

said Martin Raiser, the World Bank country director for China, Mongolia and Korea.

The World Bank expects economic activity to recover in the second half of 2022, supported by further stimulus measures and relaxation of housing regulations.

However, domestic demand should gradually recover and partially offset the losses associated with the last outbreak.

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