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Economy Watch: China View (March 2022)
March 31, 2022 | Report
China's ambitious growth target faces big challenges
Against the dual headwinds of increasing COVID outbreaks and escalating geopolitical tensions, China’s growth target of 5.5 percent is considered ambitious. The target, announced on March 5, will require significant policy support in the near-term if it is to be met. But even with new, major policy support, the target may still be very difficult to achieve given the imminent impact of the Ukraine crisis on the Chinese economy. These impacts include harmful commodity inflation, severe supply chain disruptions, and depressed global demand for China’s exports. Increased domestic energy supply and capped utility prices for residential use may cushion these shocks to some extent. Assuming a peak in oil price at an average of USD 125 per barrel in Q2, we expect China’s GDP growth in 2022 to be near 5 percent.
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