China Outlook from the WEO

July WEO Update:

In China, further restrictions and a deepening real estate crisis led to a 1.1 percentage point revision in growth with severe global spillovers.

This is shown in the following chart as the most recent reduction in projected growth rates and projected GDP levels:

Figure 1: China Real GDP 2019 = 1 (black) and IMF World Economic Outlook forecasts for January (blue circle), April (red triangle), July (sky blue square) and Bloomberg Economics (pink square). GDP is calculated by summing quarterly growth rates. ECRI has identified peak-to-trough dates shaded in grey. Source: NBS, IMF WEO (various editions), Bloomberg Economics, ECRI and author’s calculations.

Last WEO Forecast implies the same level for the end of 2022 as the May forecast of Deutsche Bank and Goldman Sachs (see chart). mail).

Further details:

COVID-19 outbreaks and movement restrictions as part of the government’s COVID-19 strategy have disrupted economic activity widely and severely (Figure 3). Shanghai, a major global supply chain hub, imposed a strict lockdown in April 2022, shutting down city-wide economic activity for about eight weeks. In the second quarter, real GDP contracted significantly by 2.6 percent in a sequential order due to lower consumption, the sharpest decline since the first quarter of 2020 at the beginning of the pandemic, when it contracted by 10.3 percent. Since then, more contagious variants have caused an alarming surge in COVID-19 cases. The aggravation of the crisis in the real estate sector in China also reduces sales and investment in real estate. The slowdown in China has global implications: lockdowns added to global supply chain disruptions and lower domestic spending are dampening demand for goods and services from China’s trading partners.

Figure 3 shows the impact of the pandemic on manufacturing activities and government responses.