China growth to slow to 3.2% in 2022, World Bank says

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China growth to slow to 3.2% in 2022, World Bank says

The World Bank said on Tuesday that China's growth in East Asia and the Pacific will slow to 3.2 per cent in 2022, down from its 5.0 per cent forecast in April and the previous year's growth of 7.2 per cent.

The World Bank said that the slowdown in China was mainly due to the zero-COVID rules that have disrupted industrial production, domestic sales and exports.

China, which makes up 86 per cent of the 23 country region's economic output, is projected to grow 2.8 per cent this year, a significant decline from the bank's previous forecast of 5.0 per cent. China's economy increased by 8.1 per cent in 2021, its best growth in a decade.

The second-largest economy in the world has grown by 4.5 per cent for the year 2023.

As countries prepare for slowing global growth, they should address domestic policy distortions that are an obstacle to longer term development, according to World Bank East Asia and Pacific Vice President Manuela Ferro.

There was an increase in interest rate hikes that central banks across the world are undertaking to combat soaring inflation, which was another risk to the region's outlook. The World Bank said these factors have resulted in capital outflows and currency depreciations.

The multilateral aid agency cautioned policymakers on imposing price controls by way of subsidies, as they warned that these measures would only benefit the wealthy and draw government spending away from infrastructure, health and education.

Controls and subsidies hurt productivity and muddy price signals, said Aaditya Mattoo, World Bank East Asia and Pacific Economist.