Daily Management Review

World Bank Lowers Its Forecast For East Asia's Growth In 2022, Citing China's Slowdown


World Bank Lowers Its Forecast For East Asia's Growth In 2022, Citing China's Slowdown
Due to China's slowdown, economic growth in East Asia and the Pacific will weaken significantly in 2022, but the rate of expansion will pick up next year, the World Bank predicted on Tuesday.
In a report, the Washington-based lender predicted that growth in the East Asia and Pacific region, which includes China, would slow to 3.2 per cent in 2022 from 5.0 per cent in April and 7.2 per cent in the prior year.
According to the World Bank, China's strict zero-COVID regulations, which have disrupted industrial production, domestic sales, and exports, are primarily to blame for the country's abrupt slowdown.
This year's economic growth in China, which accounts for 86 per cent of the output in the 23-country region, was predicted to slow to 2.8 per cent from the bank's previous prediction of 5.0 per cent. The Chinese economy grew by 8.1 per cent in 2021, which was the best rate in a decade.
The second-largest economy in the world was projected to grow by 4.5 per cent in 2023.
"As they prepare for slowing global growth, countries should address domestic policy distortions that are an impediment to longer term development," World Bank East Asia and Pacific Vice President Manuela Ferro in a statement.
The aggressive interest rate increases being implemented by central banks around the world to combat skyrocketing inflation pose another threat to the outlook for the region. According to the World Bank, these have led to capital flight and currency depreciation.
The multilateral aid organization warned policymakers against using subsidies to impose price controls, saying doing so would only benefit the wealthy and divert funds away from infrastructure, health care, and education.
"Controls and subsidies muddy price signals and hurt productivity," World Bank East Asia and Pacific Economist Aaditya Mattoo, said in a statement.