World Bank lowered its East Asia growth forecast for 2022 due to a steep slowdown in China driven by a strict zero-Covid policy that has damaged industrial production, domestic sales, and exports.
The bank said in a report that growth in East Asia and the Pacific, which includes China, would drop to 3.2% in 2022, down from its 5.0% forecast in April, and the previous year’s growth of 7.2%
However, the pace of expansion will pick up next year, the World Bank said on Tuesday.
China is expected to grow at a 2.8% annual rate this year, a significant decrease from the bank’s earlier prediction of 5.0%. Chinese economic growth in 2021 was 8.1%, the highest rate in a decade. Meanwhile, in 2023, the world’s second-largest economy is likely to expand by 4.5%.
Another risk to the region’s prospects is the aggressive interest rate hikes that central banks around the world are doing to tackle growing inflation. According to the World Bank, they have resulted in currency devaluations and outflows of capital.
