© Reuters. FILE PHOTO: A participant stands near the World Bank logo at the International Monetary Fund – World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS/Johannes P Christo /
Economic growth in East Asia and the Pacific will weaken sharply in 2022 due to a slowdown in China, but the pace of expansion will pick up next year, World Bank says on Tuesday.
In a report, the Washington-based lender said it expected 2022 growth in the East Asia and Pacific region, including China, to slow to 3.2%, down from 5.0% forecast in April and 7.2% growth the previous year.
The weaker forecast is mainly due to a sharp slowdown in China, caused by strict zero COVID rules that have disrupted industrial production, domestic sales and exports, the World Bank said. .
China, which accounts for 86% of the total economic output of 23 countries, is forecast to grow 2.8% this year, a significant drop from the bank’s previous forecast of 5.0%. In 2021, China’s economy will grow by 8.1%, the best growth rate in a decade.
In 2023, the world’s second-largest economy grew at 4.5%.
“As they prepare for slowing global growth, countries should address domestic policy distortions that are impediments to long-term growth,” said World Bank East Asia Vice President. and Manuela Ferro Pacific (NYSE:) in a statement.
Another risk to the region’s outlook is the aggressive rate hikes that central banks around the world are taking to combat soaring inflation. These have caused capital outflows and currency depreciation, the World Bank said.
The multilateral aid body warns policymakers against imposing price controls by way of subsidies, warning these measures will only benefit the wealthy and attract spending. government away from infrastructure, health and education.
“Controls and subsidies affect prices and affect productivity,” said Aaditya Mattoo, East Asia and Pacific economist at the World Bank.