BEIJING: China’s “sharp and uncharacteristic” economic slowdown is expected to drag on growth across Asia through the end of next year, the International Monetary Fund (IMF) warned on Friday, darkening an already gloomy global outlook.
Worldwide economic prospects have dimmed this year as countries have faced higher living costs, tighter financial conditions and increased uncertainty following Russia’s invasion of Ukraine.
The crises have dulled the rebound from the Covid-19 pandemic, even as Asia has remained a “relative bright spot” compared with other parts of the globe, the IMF said in its Regional Economic Outlook.
But growth in the region faces headwinds from a Chinese economy weighed down by a hardline zero-Covid policy and a crisis in the property sector, the organisation said.
Earlier this month, the IMF announced it had cut its growth forecast for China to 3.2 per cent in 2022, which would be the smallest expansion in around four decades, excluding the first year of the pandemic.
The new report downgrades the growth forecast for Asia to four percent this year, down 0.9 percentage points from a previous outlook in April.
The organisation said it expects China’s growth to rise to 4.4pc and Asia’s to increase to 4.3pc next year, still “well below” the average of about 5.5pc over the past two decades.
China’s “broad-based” slowdown “is estimated to have important spillovers to the rest of Asia through trade and financial links”, according to the IMF.
It noted that the region may also face other “persistent” headwinds in the form of tighter global monetary policy and Moscow’s invasion of Ukraine, which has caused commodities prices to spike.
“Asia’s strong economic rebound early this year is losing momentum, with a weaker-than-expected second quarter,” said Krishna Srinivasan, the director of the IMF’s Asia and Pacific Department.
Published in Dawn, October 29th, 2022
