The World Bank has slashed its economic outlook for the Asia-Pacific, pointing to China’s ultra-strict “zero-COVID” policy as a drag on regional growth.
The region’s economies are expected to grow 3.2 percent in 2022, down from a 5 percent forecast in April, as China’s lockdowns continue to disrupt factories and dampen spending, the Washington-based financial institution said on Tuesday.
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China, the world’s second-largest economy, is projected to grow 2.8 percent this year, according to the bank, and 4.5 percent in 2023.
The lender previously predicted China would grow 5 percent in 2022.
The bank is the latest financial institution to cut its growth forecast for Asian economies after the Asian Development Bank (ADB) last week lowered its growth outlook for the region’s developing economies for 2022 from 5.2 percent to 4.3 percent.
Despite the rest of the world’s moves towards living with the coronavirus, China has stuck to a zero-tolerance strategy aimed at stamping out the coronavirus at almost any cost.
China’s economy barely avoided contraction in the second quarter, with gross domestic product (GDP) expanding just 0.4 percent on year during the April-June period.
The World Bank also pointed to aggressive interest rate hikes by central banks trying to curtail soaring inflation as a risk to the region’s growth.
“As they prepare for slowing global growth, countries should address domestic policy distortions that are an impediment to longer term development,” World Bank East Asia and Pacific Vice President Manuela Ferro in a statement.