China’s economic output will lag the rest of Asia for the first time since 1990, according to World Bank forecasts that highlight the damage wrought by President Xi Jinping’s zero-Covid policies and the collapse of the world’s largest real estate market.
The World Bank has revised its forecast for gross domestic product growth in the world’s second largest economy down to 2.8% from 8.1% last year, and down from its forecast made in April. between 4 and 5%.
At the same time, expectations for the rest of East Asia and the Pacific have improved. The region, excluding China, is expected to grow by 5.3% in 2022, compared to 2.6% last year, thanks to high commodity prices and a rebound in domestic consumption after the pandemic.
“China, which was leading the post-pandemic recovery, and largely ignored the delta [Covid variant] difficulties, is now paying the economic cost of containing the disease in its most infectious manifestation,” Aaditya Mattoo, the World Bank’s chief economist for East Asia and the Pacific, told the Financial Times.
China had set a GDP target of around 5.5% this year, which would have been the lowest in three decades. But the outlook has deteriorated markedly over the past six months.
Xi’s policy of relentlessly suppressing coronavirus outbreaks through instant lockdowns and mass testing has restricted mobility and undermined consumer activity much like China’s real estate sector – which accounts for around 30% of economic activity – suffers a historic collapse.
Read more about the World Bank forecast here.