MANILA, PHILIPPINES (21 September 2022) — Economic growth in the People’s Republic of China (PRC) is expected to moderate to 3.3% this year, amid restrictions related to the COVID-19 pandemic and tepid consumer demand, according to a new report by the Asian Development Bank (ADB).

The PRC’s economy is forecast to grow 4.5% in 2023, according to the Asian Development Outlook (ADO) 2022 Update, released today. Inflation is projected to accelerate next year due to higher food prices.

The COVID-19 pandemic continues to weigh on consumer confidence in the PRC, while an ailing property sector is holding back investment. External trade is projected to moderate in the second half of 2022, as demand for consumer goods softens in advanced economies amid rising inflation and energy prices. However, higher infrastructure investment and government spending are expected to support growth in the second half, as the government seeks to stoke household demand, support the property sector, and address high youth unemployment.

“Growth has slowed sharply as COVID-19 lockdowns disrupted economic activity,” said ADB Officer-in-Charge for the PRC Hao Zhang. “However, we expect economic growth to pick up in the second half of this year, with services recovering in line with improving household demand.”

Consumer price inflation in the PRC is forecast to average 2.3% in 2022 and 2.5% in 2023. Driven by rising pork prices, food inflation is expected to remain elevated in in the second half of this year.

Risks to the PRC’s outlook include renewed outbreaks of COVID-19, which have prevented domestic consumer demand from fully recovering; further deterioration in the property market; and mounting risks in the financial system—especially at smaller banks, which could temporarily disrupt the market and trigger policy interventions. Strains on global value chains, caused by temporary supply shortages or transport bottlenecks, and slower-than-expected growth in advanced economies could also further dampen external trade. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

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