US bank Goldman Sachs has dropped its forecast for China’s economic growth in 2022 to 4.3% citing issues with the new, more-contagious omicron variant of Covid-19, reports Caixin. The lower forecast from the bank’s previous projection of 4.8% incorporates a drag of 0.9% from Covid-related restrictions, which will be partly offset by monetary and fiscal easing.
The negative impact from infections and restrictions as China pursues a policy of virus elimination will mostly be felt in the first quarter of 2022. But it is possible we will see a rebound in the following three months, assuming that outbreaks can be controlled more easily after the winter months and as booster vaccinations are more widely deployed.
China confirmed its first locally transmitted cases of omicron in the past week, leading to tightened travel restrictions and business closures in areas where the cases have been found. Goldman’s forecast is below the median projection of 5.2% growth for the world’s second-largest economy based on a Bloomberg survey of economists.