IMF cuts China’s GDP growth forecast, adding ‘the worst is yet to come’ for the global economy

The International Monetary Fund has forecast China’s economy to expand by 3.2 per cent in 2022, slightly lower than its previous estimate

The Washington-based institution left its global economic growth prediction unchanged at 3.2 per cent, but revised down its 2023 forecast

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China’s economic outlook is dimming due to a number of factors, including Beijing’s hardline zero-Covid policy and a property sector downturn. Photo: Reuters

Published: 9:00pm, 11 Oct 2022Updated: 11:20pm, 11 Oct 2022

The International Monetary Fund (IMF) on Tuesday lowered its growth estimate for China’s economy this year, saying the country’s slowdown, the Ukraine war and inflation triggered by aggressive US monetary tightening are the three main headwinds facing the global economy.

The IMF forecast the world’s second largest economy to expand by 3.2 per cent in 2022, slightly lower than its previous estimate of 3.3 per cent, according to its latest World Economic Outlook.

The Washington-based institution also cut China’s forecast for next year from 4.6 per cent to 4.4 per cent – a far cry from the 8.1 per cent expansion seen in 2021.

In comparison, the IMF’s 2023 gross domestic product (GDP) growth estimates for the United States and India remained unchanged, at 1 per cent and 6.1 per cent, respectively.

China’s economic outlook is dimming due to a number of factors, including Beijing’s hardline zero-Covid policy, a property sector downturn and a volatile geopolitical situation.

If, as the IMF predicts, China’s economy expands only 3.2 per cent this year, it will be the country’s lowest growth rate in four decades, excluding the initial coronavirus crisis in 2020.

That spells trouble for the rest of the world, according to the IMF, given China accounts for one-fifth of the global economy and is integral to supply chains.