Coronavirus: Shanghai lockdown heaps pressure on China’s GDP growth, with ‘more uncertainties’ to come
- China could see as much as 10 percentage points shaved off economic growth on a quarterly basis if zero-Covid is maintained, Everbright Securities says
- The world’s No 2 economy is facing its worst virus outbreak in two years and has imposed widespread lockdowns, including in the commercial hub Shanghai
China’s continued use of lockdowns to eliminate a new wave of coronavirus infections sweeping the country will take a heavy toll on the economy that could be similar to the aftermath of the initial 2020 outbreak, analysts said.
China’s economy was hit hard in the first quarter of 2020, shrinking by 6.8 per cent, after the coronavirus triggered a near-nationwide lockdown over the period. The world’s second largest economy is facing a new challenge as virus outbreaks pop up around the country, including in its international financial and trade hub, Shanghai.
Analysts said the current outbreaks – the worst in two years for China – will put more pressure on a slowing economy in coming months and authorities will need to respond with more easing to cushion the blow.
02:51
Shanghai imposes phased lockdowns as daily Covid infection numbers surge beyond 3,000
Another estimate by French bank Natixis said the sharp reduction in mobility due to lockdowns and transport restrictions could shave off 1.8 percentage points to GDP in the first quarter.
“What seems clear now is that achieving the 5.5 per cent growth target set by the government work report is facing increasing headwinds, as China’s GDP will be under more pressure than earlier expected for the first quarter and more uncertainties will probably arrive in the following quarters,” said Natixis on Wednesday. China is set to release its first quarter economic data on April 18.