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Goldman lowers China growth forecast to 4% for 2022


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HONG KONG — Goldman Sachs analysts said on Wednesday they lowered their forecast for China’s 2022 GDP growth from 4.5% to 4% as a result of COVID-related damage to the economy in the second quarter of this year.

It was more likely that the Chinese economy would fall short of its target than overshoot, she added.

Embedded even in this lower growth forecast is the assumption that COVID will be largely under control going forward, that the real estate market will improve from here on out, and that the government will provide substantial policy compensation through infrastructure spending in the coming months,” they wrote.

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China’s retail and manufacturing activity fell sharply in April as widespread COVID-19 lockdowns closed workers and consumers at home and severely disrupted supply chains.

China’s uncompromising strategy to fight COVID has put hundreds of millions of people in dozens of cities under restrictions of some form and disrupted a global revival in manufacturing of everything from cell phones to electric vehicles.

While the United States, Europe and other major economies have chosen to “live with the virus” as they reopen and rely on vaccines to fight the pandemic, such policies in China are seen as an encouragement to do nothing against a deadly and highly contagious virus and as such are politically unpalatable.

Shanghai’s commercial center reached Wednesday for the fourth consecutive day with no new infections outside the most closed areas, but authorities are not lifting the lockdown immediately, but are gradually easing restrictions until June 1.

Economists say China’s official 2022 growth target of around 5.5% seems increasingly difficult to achieve.

(Reporting by Alun John in Hong Kong; editing by Andrew Heavens and Kim Coghill)

This post Goldman lowers China growth forecast to 4% for 2022

was original published at “https://financialpost.com/pmn/business-pmn/goldman-cuts-china-2022-growth-forecast-to-4”

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