Weaker growth in China owing to stringent COVID-19 restrictions and an increase in US interest rates could dampen the region’s economic growth prospects for the remainder of the year
July 2022
Louis Kuijs
Asia-Pacific Chief Economist at S&P Global
An aerial view of Tanjung Priok industrial port in North Jakarta. Photo by Shutterstock.
With the exception of China, Asia-Pacific is breathing easier than the rest of the world. Global obstacles have altered the outlook in the past three months. These include a longer-than-expected Russia-Ukraine conflict; higher energy and commodity prices; higher and more sticky inflation, especially in the US; faster monetary policy normalisation in the US and Europe; and economic damage from COVID-19 lockdowns and restrictions in China.
These hurdles led us to downgrade our 2022 global growth forecast in our interim update in May. We cut our GDP growth projections for the US, China, and Europe by 0.7-0.8 percentage points and raised consumer price index (CPI) inflation forecasts for the US, Europe, and some Asia-Pacific economies. In our current global forecast round we have further reduced our growth projections and raised our inflation projections for a range of economies.
For Asia-Pacific, the two key changes to the global outlook are the weaker growth in China due to stringent COVID restrictions and the higher projected US interest rates. Considering the slower-than-expected easing of COVID restrictions and shallow recovery of domestic demand in China, we have further lowered our baseline 2022 growth forecast for the country to 3.3% (compared to our interim update in May). READ MORE HERE