BOFIT Viikkokatsaus / BOFIT Weekly 2022/04
The IMF this week released its updated forecasts. The IMF now sees China’s GDP growing by 4.8 % this year, down from its 5.6 % forecast last October. Earlier this month, the World Bank lowered its forecast for 2022 from 5.4 % to 5.1 %. Other institutions have also cut their China forecasts. A big factor in the general reduction in outlook has been the spread of the highly contagious omicron variant of covid in China. It is expected that resulting lockdowns and restrictions will reduce economic growth as China continues to pursue a strict suppression strategy in dealing with covid. A second commonly mentioned reason was the unexpectedly abrupt slowdown in Chinese economic growth in the second half of 2021 as problems in the real estate sector emerged. The challenges facing China’s real estate sector are expected to continue this year. Forecasts for 2023 are currently also around 5 %.
China has yet to release an official national GDP growth target for 2022, but several provincial governments have declared annual growth targets. The lowest target (“above 5 %”) has been set by the Beijing municipality, and the highest (“around 9 %”) by Hainan province. The economically important Shanghai municipality and Guangdong province are targeting 5.5 % growth, the Jiangsu and Shandong provinces over 5.5 % growth, and the Zhejiang province around 6 % growth. Released regional targets suggest that national target could well fall in the 5–6 % range, which is higher than the current forecasts from most international institutions.
Forecasts for China’s GDP growth in 2022 and 2023 (% p.a.)