World Bank Projects Lower Growth for China

The World Bank has cut its growth outlook for China’s economy, in large part because of the destructive effects of the country’s three-year Zero-COVID curbs. China’s real estate slump is also pulling down the prospects of the world’s second largest economy.

In projections released on Tuesday, the World Bank slashed China’s anticipated growth for 2022 to 2.7%, far lower than the 4.3% expected figure from June.

Analysts have warned that there is a direct correlation between the harshness of China’s COVID measures and its economic activity. Strict measures lead to an economic downturn, and any economic uptick comes after an uneven recovery.

China’s leadership has begrudgingly started to unwind its draconian Zero-COVID rules after nearly three years of damaging restrictions. The remaining curbs, although much smaller than what came before, are still creating pain for struggling businesses.

After widespread protests forced China’s leaders to adapt its pandemic policies, there has been a marked increase in vaccinations and public health preparedness, which is accepted as a more business-friendly approach than harsh movement restrictions.

The World Bank further added in its notes that China’s economy faced significant non-pandemic-related risks, including the unclear global economic outlook, climate change, and continuing stress in the country’s embattled real-estate market.

Analysts believe that China must offer more macroeconomic policy support as growth is expected to remain sub-par, just as the global environment is weakening.