China’s economy likely to slow in 2024, Asia faces one of worst outlooks

The World Bank cut its growth forecast for China next year and warned that developing economies in East Asia are set to expand at one of the lowest rates in five decades.

The World bank’s bleak 2024 outlook underscored growing concern about China’s slowdown and how it will spill over into Asia. China’s policymakers have already set one of the lowest growth targets in decades for 2023, at about 5%.

The World Bank said it now expects China’s economic output to grow by 4.4% in 2024, down from the 4.8% it forecast in April.

The World Bank also lowered its 2024 forecast for GDP growth for developing economies in East Asia and the Pacific, which includes China, to 4.5%, from an April forecast of 4.8% and lagging the 5% rate expected this year.

Projections show that the region, one of the world’s major growth engines, is set for the slowest pace of growth since the late 1960s, barring exceptional events such as the coronavirus pandemic, the Asian financial crisis, and the global oil shock of the 1970s.

Economists expected China’s recovery from strict pandemic controls to be “more sustainable and more significant than it turned out to be,” said Aditya Mattoo, the World Bank’s chief economist for East Asia and the Pacific.

The World Bank pointed to a decline in Chinese retail sales below pre-pandemic levels, stagnant house prices, increasing household debt, and a slowdown in private sector investment.

Mattoo warned that the growth slowdown would continue unless governments, including China, embarked on ‘deeper’ reforms of the services sector.