China's economy slumps due to latest Covid outbreak

Beijing: China’s economy has been hit hard by the frequent Covid outbreaks over the past year. In 2022, China’s economy registered a growth rate of just three per cent. This is the lowest level since 1976. China’s growth rate has fallen by more than half compared to 2021. In 2021, China had achieved a growth rate of 8.4 per cent. After 2022, 2023 will also be difficult for China’s economy, analysts have warned.

Last year, China had to bear the shocks of frequent Covid outbreaks. The outbreaks, which started small in China’s leading cities, turned serious at the end of the year. China’s Communist regime had implemented a very aggressive and stringent ‘Zero Covid Policy’ to contain the infections. However, China was forced to withdraw this policy due to public dissatisfaction. After the restrictions were lifted, the country had a huge explosion of Covid infections. Peking University, a leading educational institution in China, has informed that the number of people infected with Coronavirus has reached 90 crores. After that, the Chinese authorities announced that 60 thousand of people died due to Covid within a period of just one and a half months.

It is clear from the new statistics that the Covid outbreaks and the ‘Zero Covid Policy’ implemented to prevent it has given a big shock to the Chinese economy. China’s economy grew by just 2.9 per cent in the quarter from October to December 2022. It was a drop of almost one per cent from 3.9 per cent in the previous quarter. Poor performance in trade and retail spending was the main reason behind this. At the same time, China’s real estate sector has not recovered and it is claimed that the Chinese economy was hit by this as well. China’s Communist regime had predicted that the growth rate would be 5.5 per cent in 2022.

However, the World Bank and the International Monetary Fund had warned that China’s GDP growth rate would fall below three per cent. Statistics show that the predictions of international financial institutions have come true. China’s economic growth rate of just three percent is the lowest in five decades. In 1976, China’s GDP growth rate was recorded as minus 1.57 per cent and in 1974, it was recorded as 2.31 per cent. Analysts have warned that China’s immediate future is also difficult after the decline in the economy in 2022.

Moody’s Analytics has warned that China’s economy will continue to face shocks in 2023 due to Covid outbreaks, the decline in the real estate sector and weakening demand for products at the global level. According to Oxford Economics, there is a possibility that consumer demand in China will decrease in the view of Covid infections, which will be a problem for the economy.

Meanwhile, the fall in China’s economy hit the international stock market. Stock indices in Europe and Asia fell and the index in Hong Kong fell by two per cent. The value of China’s yuan currency has also come down.

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