Amid COVID-19, China’s Domestic Forecasts Also Predict "Only 2.6% Growth This Year"

▲Xi Jinping, President of China [Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Due to the COVID-19 pandemic, there are projections within China that the Chinese economy will grow by only 2.6% this year.

According to the South China Morning Post (SCMP) in Hong Kong on the 25th, the China International Capital Corporation (CICC) recently released a report forecasting that China's economic growth rate this year will be limited to 2.6%. This is less than half of the 6.1% forecast announced in January.

The report warned, "As long as the spread of COVID-19 continues, more negative figures will continue to be announced in the second quarter," and added, "The severe global economic recession triggered by COVID-19 could persist throughout the second and third quarters."

Furthermore, the report predicted that it will be difficult to prevent the recession even with various stimulus measures and monetary policies from the Chinese government. It forecasted that China's exports will decrease by about 18% this year.

Earlier, Chinese President Xi Jinping set an ambitious goal to build a "Xiaokang (a moderately prosperous society where all citizens enjoy a comfortable and affluent life)" by this year.

To achieve this, China's GDP in 2020 must be twice the size of that in 2010, and the growth rate this year must reach at least 5.6%.

However, as global investment banks have successively lowered their growth forecasts for China, there is growing speculation that even growth in the 5% range may be difficult.

Japan's Nomura recently lowered its growth forecast for China this year from 4.8% to 1.3%. The US Bank of America Merrill Lynch projected that China's economy will contract by 6% in the first quarter and grow only 1.5% for the entire year.

However, some optimistic views suggest that the Chinese economy will achieve solid growth this year by overcoming the shock of COVID-19.

Wei Jianguo, former Vice Minister (vice minister-level) of China's Ministry of Commerce, predicted that once the spread of COVID-19 subsides, pent-up consumption will explode, and China's domestic demand this year will grow by 8% compared to last year, reaching $6.3 trillion (approximately 7,700 trillion won).

This content was produced with the assistance of AI translation services.