The preliminary findings released earlier this week by the International Monetary Fund (IMF) showed that China's economy is projected to grow at 3.2% in 2022, then rise by 4.4% for the next two years as the country's growth remains under pressure following an "impressive" recovery from the pandemic's initial impact.
Gita Gopinath, IMF's first Deputy Managing Director, said: "Under the zero-COVID strategy, China weathered the initial impact of the pandemic well, allowing the economy to recover swiftly from the early-2020 lockdowns and to expand the global supply of medical goods and durable goods significantly at a critical time for the global economy.”
Additional comments
"However, China's growth has since slowed and remains under pressure amid recurring COVID outbreaks, deep challenges in the property sector and slowing global demand.”
“The regulatory tightening in the property sector, while well intended to rein in high leverage, has added to severe financial strains for developers, leading to a rapid slowdown in housing sales and investment, along with a sharp decline in local government land-sale revenues.”
"Against this backdrop, growth is projected at 3.2 percent for 2022, increasing to 4.4 percent in 2023 and 2024, under the assumption that the current zero-COVID strategy will be gradually and safely lifted in the second half of 2023.”
Market reaction
USD/CNY is losing 0.35% on the day to trade at 7.1427, at the time of writing. The Chinese Yuan is resilient to the concerns over China’s record high covid cases and economic growth.
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