Another gloomy forecast for China’s economic growth this year

Business & Technology

The IMF lowered its GDP estimate for China, again.

Business is slow at Yangshan Port in Shanghai. Xinhua/Ding Ting.

The International Monetary Fund (IMF) again pared its GDP forecast for China this year with an estimate of 4.4%, down from its 4.8% estimate in January, and well below the 5.5% growth target set by Beijing earlier in March.

  • The World Bank on Monday also slashed its global growth forecast for 2022 from 4.1% to 3.2% and predicted China’s growth to slow to 5.2% through next year, citing headwinds from the pandemic, tighter regulations, and diminishing support from exports.

China’s GDP grew a surprise 4.8% this past quarter compared with the same period last year, the National Bureau of Statistics reported, beating analysts’ expectations of 4.4% and a step up from the alarming 4.0% that rounded out 2021.

However, much of the growth increase was recorded in the two months before the current lockdowns began. Some analysts are warning of “distress” in the months to come.

  • In a signal that the decline might get worse, March retail sales fell 3.5% from a year earlier.
  • China’s semiconductor chip production also shrank 4.2% in the same quarter of this year due to COVID lockdowns, producing 80.7 billion integrated circuits during the period.
  • Overall, production from industries across the board saw a dampened growth of 5% year-on-year in March, compared with 7.5% in January and February.

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China’s central bank rolled out a raft of measures to support struggling individuals and businesses, as the nation’s economy braces for more hits from widespread COVID-19 lockdowns and Russia’s war in Ukraine.

  • ​​Over the weekend, Shanghai released a document with 21 guidelines to improve the flow of logistics and quality of life in the city, and a white list of 666 companies that can resume work, in a sign of some reprieve for the COVID-hit commerce hub.
  • The People’s Bank of China, the central bank, also urged banks to lend more to people with “flexible employment,” such as taxi drivers, online retailers, and truck drivers, and to provide longer-term and cheaper loans to small businesses.
  • “The long-term economic fundamentals remain sound and the continued momentum of economic recovery has not changed,” NBS spokesperson Fù Línghuī 付凌晖 told a press conference, state-run Xinhua reports, in a bid of confidence that the country can overcome the headwinds.

Anxiety over the world’s second-largest economy is inevitable as long as Beijing maintains its COVID-zero playbook. But the government is steeling its resolve and the year is far from over.

Nadya Yeh