Growth expectations for world's second-largest economy fall

Growth in the Chinese economy is expected to remain below 5 percent for the next few years due to the risk posed by the ‘Zero Covid’ policy. Economists have lowered their growth forecasts on the expectation that the Chinese government will not be in a hurry to lift pandemic restrictions. The median forecast of economists surveyed by Bloomberg is for growth to remain below 5 percent in 2022 and 2023. The forecast for this year was lowered from 3.4 percent to 3.3 percent, and for next year from 5.1 percent to 4.9 percent. The forecast for 2024 was lowered from 5 percent to 4.8 percent. The Zero Covid policies implemented in China are causing pressure on many areas of the economy, such as reduced travel and spending. In addition, the crisis in the real estate sector is negatively affecting the construction and banking sectors. The fact that no message was given at the Communist Party Congress that this policy would be abandoned has led to increased concerns about the economic outlook. 11 out of 18 economists surveyed expect the economy to fully open in the first half of next year. Famous investor Mark Mobius shared his prediction in an interview that the policy in question could be terminated by the end of this year. ABN Amro Bank also revised its forecasts downward. The growth expectation for this year is 3.5 percent, and the expectation for 2023 is 5.2 percent. Institutional Economist Arjen van Dijkhuizen said, “Since we do not expect a rapid reversal in the Covid policy after the congress, we revised our growth forecasts downward while the real estate sector is still experiencing difficulties and global growth is also slowing down sharply.” The survey predicted that inflation would be 2.7 percent in the last quarter. While export expectations increased, import expectations decreased.