"China's Economic Growth Rate Expected to Stay in Mid-4% Range... Need for Diversification of South Korea's Export Markets"

[Asia Economy Reporter Seo So-jeong] There is a forecast that China's economic growth rate will remain in the mid-4% range, falling short of the government's target of 5.5% due to the spread of COVID-19.

The Bank of Korea's China Economy Team stated in its report titled "Economic Impact and Outlook of China's Zero COVID Policy" on the 24th, "Due to strengthened quarantine measures, industrial production and consumption are expected to contract in the second quarter of this year, and in some regions where lockdowns have been prolonged, the scale of economic losses is likely to expand."

According to the report, major international organizations predict that China's economic growth this year will slow down by 0.2 to 0.8 percentage points compared to previous forecasts. The International Monetary Fund (IMF) lowered its forecast for China's economic growth rate this year from 4.8% to 4.4%, a 0.4 percentage point decrease, due to the resurgence of COVID-19 and the war in Ukraine.

Investment banks such as JP Morgan (4.9→4.6%), UBS (5.0→4.2%), Barclays (4.5→4.3%), and Morgan Stanley (5.1→4.6%) have also recently revised their forecasts downward.

The report expects that China's Zero COVID policy will be maintained for a considerable period, but specific quarantine measures will gradually be eased to reduce social and economic burdens. The 20th National Congress of the Chinese Communist Party, where President Xi Jinping's third term will be decided, is scheduled to be held in October, and China is expected to introduce overseas-made therapeutics and vaccines, suggesting that the Zero COVID policy will be relaxed in the future.

The Bank of Korea emphasized, "If the slowdown in China's economic growth continues, the impact on the domestic economy, which has a high trade dependence on China, will be inevitable," adding, "Since it will no longer be easy for the domestic economy to grow relying on China's high growth, efforts to diversify export markets and enhance industrial competitiveness from a mid- to long-term perspective need to be sustained."

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