The World Bank has sharply slashed its annual growth forecast for China, saying in a report yesterday that COVID-19 disruptions could further slow recovery in the world’s second-largest economy.
China is the last major economy wedded to a “zero COVID” policy, using rapid lockdowns, mass testing and strict movement restrictions to eliminate outbreaks, but it has tangled supply chains and dragged economic indicators to their lowest levels in about two years.
Growth in China is projected to slow to 4.3 percent this year, marking a steep 0.8 percentage-point drop from its forecast in December last year, the World Bank said in the report.
Photo: EPA-EFE
This “largely reflects the economic damage caused by Omicron outbreaks and the prolonged lockdowns in parts of China from March to May,” the report said, referring to the highly transmissible variant of SARS-CoV-2.
In those months, restrictions on dozens of cities including the manufacturing hubs of Shenzhen and Shanghai, as well as the breadbasket province of Jilin, battered business operations and kept consumers at home.
“In the short term, China faces the dual challenge of balancing COVID-19 mitigation with supporting economic growth,” World Bank country director for China, Mongolia and South Korea Martin Raiser said.
“The dilemma ... is how to make the policy stimulus effective, as long as mobility restrictions persist,” Raiser said.
Activity is expected to rebound in the latter half of this year, helped by fiscal stimulus and more easing of housing rules, the World Bank said.
However, domestic demand would likely recover gradually and only partly offset earlier damage related to the COVID-19 pandemic, it said.
The World Bank’s forecast adjustment came as concerns grow that China might not meet its official growth target of about 5.5 percent this year.
Chinese Premier Li Keqiang (李克強) has said that the challenges today are in some ways “greater than when the pandemic hit” in 2020, and the government has rolled out a series of measures to try and jump-start the economy.
The Chinese government has also launched a major infrastructure push this year, but the World Bank said that this was a precarious path.
“There is a danger that China remains tied to the old playbook of boosting growth through debt-financed infrastructure and real estate investment,” it said. “Such a growth model is ultimately unsustainable and the indebtedness of many corporates and local governments is already too high.”
The latest forecast also assumed that China’s “zero COVID” policy would be “maintained in the short term to avoid stressing its health care system,” meaning the possibility of recurrent disruptions.
The World Bank has also cut its global growth forecast to 2.9 percent, 1.2 percentage points below the January forecast, saying the world economy risks falling into a harmful period of 1970s-style “stagflation” in the wake of the Russian invasion of Ukraine.
“The risk from stagflation is considerable with potentially destabilizing consequences for low and middle-income economies,” World Bank president David Malpass told reporters. “For many countries recession will be hard to avoid.”
If risks to the outlook materialize, global growth could slow even more sharply — triggering a worldwide recession, Malpass said.
The report cut the US growth estimate by 1.2 points to 2.5 percent, while the eurozone forecast was cut to 2.5 percent, and Japan to 1.7 percent.
Russia’s economy is expected to contract by 11.3 percent this year.
With this year’s Semicon Taiwan trade show set to kick off on Wednesday, market attention has turned to the mass production of advanced packaging technologies and capacity expansion in Taiwan and the US. With traditional scaling reaching physical limits, heterogeneous integration and packaging technologies have emerged as key solutions. Surging demand for artificial intelligence (AI), high-performance computing (HPC) and high-bandwidth memory (HBM) chips has put technologies such as chip-on-wafer-on-substrate (CoWoS), integrated fan-out (InFO), system on integrated chips (SoIC), 3D IC and fan-out panel-level packaging (FOPLP) at the center of semiconductor innovation, making them a major focus at this year’s trade show, according
SEMICONDUCTOR SERVICES: A company executive said that Taiwanese firms must think about how to participate in global supply chains and lift their competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it expects to launch its first multifunctional service center in Pingtung County in the middle of 2027, in a bid to foster a resilient high-tech facility construction ecosystem. TSMC broached the idea of creating a center two or three years ago when it started building new manufacturing capacity in the US and Japan, the company said. The center, dubbed an “ecosystem park,” would assist local manufacturing facility construction partners to upgrade their capabilities and secure more deals from other global chipmakers such as Intel Corp, Micron Technology Inc and Infineon Technologies AG, TSMC said. It
DEBUT: The trade show is to feature 17 national pavilions, a new high for the event, including from Canada, Costa Rica, Lithuania, Sweden and Vietnam for the first time The Semicon Taiwan trade show, which opens on Wednesday, is expected to see a new high in the number of exhibitors and visitors from around the world, said its organizer, SEMI, which has described the annual event as the “Olympics of the semiconductor industry.” SEMI, which represents companies in the electronics manufacturing and design supply chain, and touts the annual exhibition as the most influential semiconductor trade show in the world, said more than 1,200 enterprises from 56 countries are to showcase their innovations across more than 4,100 booths, and that the event could attract 100,000 visitors. This year’s event features 17
EXPORT GROWTH: The AI boom has shortened chip cycles to just one year, putting pressure on chipmakers to accelerate development and expand packaging capacity Developing a localized supply chain for advanced packaging equipment is critical for keeping pace with customers’ increasingly shrinking time-to-market cycles for new artificial intelligence (AI) chips, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday. Spurred on by the AI revolution, customers are accelerating product upgrades to nearly every year, compared with the two to three-year development cadence in the past, TSMC vice president of advanced packaging technology and service Jun He (何軍) said at a 3D IC Global Summit organized by SEMI in Taipei. These shortened cycles put heavy pressure on chipmakers, as the entire process — from chip design to mass
RSS