The World Bank has forecast that China’s economy will grow by 4.3% this year, then rise by 5% in 2024, the first major projection made after the country adjusted its Covid-19 policy, downgrading the management of Covid-19 from Class A to Class B on January 8. The National Bureau of Statistics (NBS) announced that China’s GDP increased by 3% in 2022.
“Growth in China is projected to strengthen in 2023 as pandemic-related restrictions ease,” the World Bank said in its latest Global Economic Prospects report. The semiannual report predicts that the expansion of GDP is set to slow in all major economies and regions, except China. Growth in the United States is set to fall to 0.5% in 2023, which will be 1.9 percentage points below a previous forecast and the weakest performance outside of official recessions since 1970, the World Bank said. For the eurozone, flat GDP growth is expected, which was also a downward revision of 1.9 percentage points. The projected growth of 4.3% for China in 2023 is 0.9 percentage point lower than the forecast the World Bank made half a year ago.
Globally, growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment and disruptions caused by the conflict in Ukraine, with the growth in 2023 expected to slow to 1.7% from the 3% forecast six months ago. That would be the third-worst performance in nearly three decades, overshadowed only by the 2009 and 2020 global recessions, according to the World Bank. In November last year, weeks before China shifted its epidemic control focus from preventing infections to treating severe cases, the International Monetary Fund (IMF) predicted that China’s economy would grow 4.4% in 2023, 1.7 percentage points higher than the projected global average of 2.7%, according to the IMF’s World Economic Outlook. “There may be positive surprises to China’s economic outlook. This includes an orderly easing of mobility restrictions followed by a strong release of pent-up demand for consumption and services,” the report said.
A quicker-than-expected recovery in the country’s real estate sector is another upside possibility, it added. The annual Central Economic Work Conference (CEWC), held in Beijing in mid-December, has made arrangements to defuse and prevent risks in the realty sector and ensure its healthy development, highlighting the principle that “housing is for living in, not for speculation”. The meeting also announced increased efforts to widen market access and promote the opening-up of modern services industries. “There’s no evidence that China is walking away from foreign markets. I expect Chinese production and exports to pick up in 2023,” said Gary Hufbauer, Senior Fellow at the Peterson Institute for International Economics, while Jan Hatzius, Chief Economist at Goldman Sachs, expects a “kind of V-shaped recovery” in the Chinese economy, and forecasts a 5.2% growth for China this year, the China Daily reports.
