Morgan Stanley Expects Zero Growth in China Q1... Highlights Focus on Quarantine Over Economy

[Photo by AP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Morgan Stanley has lowered its forecast for China's first-quarter economic growth rate to 0%, stating that the Chinese government's policy priorities are focused more on COVID-19 prevention than on the economy, Bloomberg reported on the 14th (local time).

Morgan Stanley's previous forecast for China's first-quarter economic growth rate was 0.6%. The firm also lowered its annual economic growth forecast for China from 5.3% to 5.1%, anticipating that China will not meet the government's target of around 5.5% set at the National People's Congress (NPC) earlier this month.

Morgan Stanley revised down its growth forecast following consecutive lockdown measures in cities such as Shenzhen and Changchun.

In Shenzhen, starting from this day, commuting is prohibited for all personnel except essential social workers. As a result, operations at several manufacturing plants, including Foxconn factories, have been suspended. Shenzhen is known as China's Silicon Valley. The Shenzhen municipal government announced that the lockdown measures will last for at least one week. Changchun and Jilin cities in Jilin Province also entered lockdowns starting last week.

Morgan Stanley assessed that these lockdown measures clearly demonstrate that the Chinese government is prioritizing COVID-19 prevention over the economy. It also added that a reassessment of China's COVID-19 prevention policies is expected to be delayed.

Morgan Stanley explained, "While infrastructure investment is expected to increase and real estate regulations to be eased, the bigger issue is finding an exit strategy for COVID-19."

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