China’s GDP growth to lag behind rest of developing East Asia as zero-Covid, property crisis bite, World Bank says

The World Bank has slashed China’s 2022 growth forecast, highlighting damage from its zero-Covid policy and property market slump, while the rest of developing East Asia and the Pacific is poised to stage an economic rebound.

The Washington-based organisation cut its gross domestic product (GDP) growth forecast for the world’s second largest economy to 2.8 per cent, down from an April estimate of 5.0 per cent.

“Amid multiple domestic and external headwinds, China’s GDP growth is expected to slow sharply,” the World Bank said in its October economic update for the region, which was released on Tuesday.

“Tight mobility restrictions in response to Omicron outbreaks have weighed on growth while persistent stress in the real estate sector has exacerbated downward pressure on economic activity.”

In contrast, the World Bank revised upwards its 2022 expectations for the rest of developing East Asia and Pacific region from 4.8 per cent to 5.3 per cent, thanks to a rebound in domestic demand and exports as countries relax their Covid-19 restrictions.

Vietnam’s economy, which saw the second largest upward revision in East Asia, is expected to grow 7.2 per cent this year, up from the 5.3 per cent forecast in April. Malaysia has had its growth estimate pushed up to 6.4 per cent from 5.5 per cent.