On Tuesday, China will announce its growth rate for 2022, which experts say will be among the weakest in four decades, with health and real estate crises weighing on activity.
A group of 10 experts polled by Agence France-Presse expect the gross domestic product of the world’s second economy to grow by 2.7 percent in one year.
This will be the lowest rate since the contraction in 1976 (-1.6%) if 2020, the first year of the Covid pandemic (+2.3%) is excluded.
China’s gross domestic product grew by more than 8 percent last year. Beijing set a growth of about 5.5% for 2022.
However, this goal was affected by a strict health policy known as “Zero Covid”, which kept activity and consumption down for most of the year.
This costly strategy was based on the widespread implementation of mandatory testing for the population to detect infection, as well as the quarantine of people who test positive for the virus.
These measures resulted in the regular closure of factories and institutions, which affected operations, transport and supply networks, and contributed to reduced consumption.
In response to public discontent, China unexpectedly lifted all these restrictions in December. But since then, activity has gradually resumed, despite everything, due to the huge increase in the number of Covid patients.
As for the real estate sector, which, together with the construction sector, makes up more than a quarter of China’s GDP, it is still struggling as Beijing took steps to reduce debt in 2020.
These strict measures have left the Evergrande real estate group, considered the first in the sector, to be in financial trouble and currently heavily in debt.
As a result, property sales have plummeted.
In order to revive one of the key sectors of the economy, the authorities seem to have taken a more lenient stance in recent weeks. In particular, credit support measures for contractors were announced.
After three years of medical restrictions, “China’s reopening process is well under way,” said HSBC analyst Jing Liu.
And Liu adds that “this transitional phase will be difficult” with the risk of a new outbreak, and she does not rule out another slowdown “in the short term”.
For his part, independent economist Larry Young believes that “2023 will be the year of a return to the constants,” given that “the worst is over.”
Source: AFP.
