IN A DOWNBEAT outlook for the global economy, the World Bank had again cut its growth forecasts for China, but still sees a ‘bounce-back’ recovery this year.
The Bank estimates in its latest Global Economic Prospects that China’s economy expanded by 2.7% last year, 1.9% less than it had forecast in June.
Its forecast for this year is an acceleration to 4.3% GDP growth as the lifting of pandemic restrictions releases pent-up consumer spending.
That number is 0.9% less than the Bank’s June prediction, attributed to longer-than-expected pandemic-related disruptions, weaker external demand and protracted weakness in the real estate sector.
The recent shift toward reopening has been faster than expected, and there is significant uncertainty about the trajectory of the pandemic and how households, businesses, and policymakers in China will respond. The economic recovery may be delayed if reopening results in major outbreaks that overburden the health sector and sap confidence.
In 2024, the Bank expects further recovery to 5.0% growth, 0.1% shy of its previous forecast.
However, the Bank warns, China’s economy remains vulnerable to prolonged drag from the real estate sector, continued pandemic-related disruptions, and extreme weather events.
A slowdown in China would add further risks to already fragile global activity, with the impact being felt in global trade and commodity and financial markets. The direct trade spillovers would be most significant for China’s regional neighbours, especially those integrated into China’s supply chains, but trade-reliant developed economies would also feel the headwinds.