New Delhi: China will see slower economic growth than the rest of Asia for the first time since 1990. The World Bank predicts that this is mainly because of Xi Jinping’s zero-Covid policy and the property sector turmoil, as reported by the Financial Times (FT).
China’s GDP growth projection was lowered by the World Bank to 2.8%. The bank had predicted China’s growth rate to be between 4% and 5% in April. The second-largest economy expanded by 8.1% in 2021–2022.
Rating agencies have raised the growth estimates for Asia as China’s growth projections have been reduced (excluding China). The region is anticipated to grow by 5.3% in 2022–2023 as a result of a pickup in domestic demand. It increased last year.
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The Chinese government has revised its FY22 growth forecast downward to 5.5%. The outlook has significantly worsened during the past six months, according to FT.
In China, the zero-Covid policy has limited consumers’ freedom of movement. The nation’s property market, which makes up around 30% of the GDP overall, has been unstable for the past few years. Large real estate developers like Evergrande have broken their promises to homebuyers and defaulted on their debt repayments.
Other organisations, including Nomura and Goldman Sachs, have had to lower their forecasts for the country’s growth due to assumptions that Xi will maintain the severe lockdowns across the countries beyond 2022.
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The government must give the real estate sector more financial support in order for projects to be completed on schedule, according to the World Bank. They further stated that the crisis is indicative of a “deeper” issue.
On the other hand, several Asian nations have seen an improvement in their growth rates. The lockdown limitations have been loosened in India, Indonesia, Vietnam, and the Philippines, and consumer demand has increased.
These nations’ central banks have begun raising interest rates. However, the Chinese central bank reduced its benchmark interest rate from 3.7% to 3.65% in August.
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