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UBS cuts China's GDP growth forecast on COVID-19 restrictions

UBS cuts China's GDP growth forecast on COVID-19 restrictions

FILE PHOTO: People wearing face masks to prevent the spread of the coronavirus disease (COVID-19) walk across a street near a shopping mall in Beijing, China April 15, 2022. REUTERS/Tingshu Wang

UBS on Tuesday (May 24) trimmed its forecast for China's economic growth this year by 120 basis points to 3 per cent, as strict COVID-19 restrictions hit the country hard.

The forecast cut comes a day after JP Morgan lowered its China full-year growth forecast to 3.7 per cent from 4.3 per cent, saying a deeper-than-expected contraction was now likely this quarter due to the country's COVID-19 lockdowns.

Lockdowns in numerous Chinese cities since the beginning of April has disrupted various global supply chains and hurt its own economy.

"The lingering restrictions and lack of clarity on an exit strategy from the current COVID-19 policy will likely dampen corporate and consumer confidence and hinder the release of pent-up demand," said UBS analyst Tao Wang.

Shanghai on Saturday pushed ahead with plans to restore part of its transport network in a major step towards exiting a weeks-long COVID-19 lockdown, while financial hub Beijing was playing defence in an outbreak that has persisted for a month.

However, Wang said the easing of COVID-19 restrictions would not be as rapid as in 2020, given the fast-spreading nature of the Omicron strain.

 

 

Source: Reuters/ta

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