Goldman Sachs Lowers China's Economic Growth Forecast to 4.3% This Year Due to 'COVID-19 Lockdown Impact'

Volunteers are packing food to be provided to residents who are prohibited from going out due to lockdown measures in Xi'an, China, on the 4th (local time).
Photo by AP Yonhap News

[Asia Economy Reporter Park Byung-hee] Goldman Sachs has lowered its forecast for China's economic growth rate this year to 4.3%, Bloomberg reported on the 11th (local time). Goldman Sachs revised down its previous forecast of 4.8% by 0.5 percentage points.

Goldman Sachs stated that it lowered the growth forecast because it expects China to face greater difficulties in controlling the spread of the COVID-19 virus. It also explained that lockdown measures due to the COVID-19 spread are expected to reduce the economic growth rate by about 0.9 percentage points.

China is implementing the world's strictest lockdown measures under its zero-COVID policy. In cities under lockdown, residents are prohibited from going outside. Residents of Xi'an, Shanxi Province, with a population of 13 million, have been unable to go out since the 23rd of last month, and recently lockdown measures were also imposed in Weizhou and Anyang in Henan Province.

However, Goldman Sachs expects that the negative impact from the COVID-19 spread and lockdown measures will mostly be reflected in the first quarter. After winter ends, control is expected to become easier and vaccine distribution will increase, leading to a rebound in the second quarter.

Goldman Sachs also maintained its previous forecast that the reserve requirement ratio will be lowered by 0.5 percentage points in the first quarter this year. The one-year Loan Prime Rate (LPR), which is the effective benchmark interest rate, is also expected to be cut by 0.1 percentage points.

Goldman Sachs's forecast for China's economic growth rate this year is lower than the forecast released by the World Bank on the same day. In its semi-annual global economic outlook report released on the day, the World Bank projected China's economic growth rate this year at 5.1%.

Earlier, Morgan Stanley projected China's first-quarter economic growth rate this year to be in the 4% range. In a report released on the 9th, Morgan Stanley projected China's first-quarter economic growth rate at 4.9%, stating that if the Omicron variant spreads and more lockdown measures are implemented, the forecast could be lowered by an additional 0.6 to 0.7 percentage points.

China Securities Journal reported on the day, citing a researcher from the Development Research Center under the State Council of China, that China's economic growth rate last year is expected to have exceeded 8%. China's official economic growth rate for last year is scheduled to be announced on the 17th.

This content was produced with the assistance of AI translation services.