China’s 2022 Growth Forecast: Lowest in 40 Years Due to Pandemic and Property Woes

China’s economic growth in 2022 is projected to be the slowest it has seen in four decades, according to analysts interviewed by AFP. This forecast comes as a result of the challenges posed by the COVID-19 pandemic and issues in the property sector. The average prediction for China’s gross domestic product (GDP) growth in 2022 among the experts surveyed is 2.7 percent, a significant drop from the over 8 percent growth recorded in 2021.

Several factors have contributed to this slowdown. China’s stringent “zero-Covid” policy, aimed at controlling the spread of the virus, led to disruptions in manufacturing and consumption. Lockdowns and mass testing measures resulted in the closure of businesses and manufacturing facilities, affecting global supply chains. While China began easing pandemic restrictions in December 2022, the resurgence of COVID-19 cases has posed challenges to economic recovery, impacting both demand and supply conditions.

Additionally, the property sector, a significant driver of China’s economy, has been under pressure due to regulatory tightening initiated in 2020. This crackdown on excessive borrowing and speculation has led to financial concerns, particularly for companies like Evergrande, a major real estate developer struggling with massive debt. Despite government efforts to support the property sector, including measures to stabilize development and provide credit support, challenges persist.

Some analysts remain cautiously optimistic, pointing to measures taken to revive the economy and China’s reopening process. However, the World Bank forecasts a modest GDP rebound of 4.3 percent for 2023, indicating continued challenges ahead. Economist Larry Yang anticipates a gradual acceleration in growth throughout 2023, declaring it as “the year of returning to certainty,” with a projected GDP growth of 5 percent for the full year.

Overall, while there are signs of recovery and optimism for the future, uncertainties remain as China navigates through economic challenges and the ongoing impacts of the COVID-19 pandemic.