Global Economic Outlook – September 2022 China: Covid, property market and policy support China will likely stick to its strict The property market has faced The Chinese government Covid containment policies in the considerable headwinds since has taken a series of near future. How the government H2 2021 and the pressure fiscal and monetary policy balances the objectives of continues to mount. The measures to stimulate controlling the pandemic and slowdown has had a large impact demand. We expect more maintaining economic growth is on investment, bank loans, and measures to be announced still the key issue to watch. housing-related consumption. to support growth. China’s GDP grew by 2.5% year-over-year (yoy) in H1 Table 5: KPMG forecasts for China 2022, below its 5.5% annual growth target set in March. 2021 2022 2023 The economy grew 0.4% in Q2. It was the second lowest quarterly growth, only higher than the first quarter of 2020 GDP 8.1 3.5 5.2 when the pandemic started (-6.9%). The slowdown in Q2 Inflation 0.9 2.5 2.3 was mainly due to a resurgence of the Omicron variant of Unemployment rate 5.1 5.4 5.1 Covid between March to May, which caused lockdowns in some areas and logistic disruptions. Source: Wind, KPMG forecasts. Average % change on previous calendar year except for the unemployment rate, which is the average annual rate. Inflation measure used is the CPI, and the unemployment measure is the surveyed unemployment rate. Chart 19: Contributions to China’s real GDP growth by sector 20% 15% 10% 5% 0 -5% -10% 2015 2016 2017 2018 2019 2020 2021 2022 Final consumption Gross capital formation Net exports Real GDP growth Source: China’s National Bureau of Statistics, Wind, KPMG analysis. © 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 20