Economic growth in China is expected to moderate to 3.3% this year, amid restrictions related to the COVID-19 pandemic and tepid consumer demand, according to a new report by the Asian Development Bank (ADB).
China’s economy is forecast to grow 4.5% in 2023, according to the recently released Asian Development Outlook (ADO) 2022 Update.
The COVID-19 pandemic continues to weigh on consumer confidence in China. External trade is projected to moderate in the second half of 2022, as demand for consumer goods softens in advanced economies amid rising inflation and energy prices.
“Growth has slowed sharply as COVID-19 lockdowns disrupted economic activity,” ADB Officer-in-Charge for China Hao Zhang said in a press release. “However, we expect economic growth to pick up in the second half of this year, with services recovering in line with improving household demand.”
Consumer price inflation in China is forecast to average 2.3% in 2022 and 2.5% in 2023.
Risks to China’s outlook include renewed outbreaks of COVID-19, which have prevented domestic consumer demand from fully recovering; further deterioration in the property market; and mounting risks in the financial system—especially at smaller banks, which could temporarily disrupt the market and trigger policy interventions.
Strains on global value chains, caused by temporary supply shortages or transport bottlenecks, and slower-than-expected growth in advanced economies could also further dampen external trade.