Reuters: COVID-A Reuters poll indicated that 19 lockdowns likely hindered China’s economic growth in the second quarter, a Reuters poll indicated, suggesting policymakers may need to do more to boost the economy.
Reuters polled 50 economists and found that the consensus expectation for April-June GDP growth was 1.0%.
The predicted growth would be the slowest since the first quarter of 2020, when a COVID-19 outbreak in Wuhan turned into an epidemic and caused a 6.9% drop in growth.
A poll says the second quarter GDP is expected to dip 1.5%, compared to 1.3% in January-March.
“The second-quarter GDP took another hit from COVID beyond 2020,” said Nie Wen, a Shanghai-based economist at Hwabao Trust.
Future recoveries won’t be as strong as the one in 2020 because of COVID limits, and exports and the real estate market could be hurt by both outside and inside factors.
As central banks tighten their policies to fight inflation, a global economic collapse is likely.
The third quarter is anticipated to grow 4.8% and the fourth quarter 5.1%, bringing full-year growth to 4%, vs 5% in an April Reuters poll.
Second-quarter GDP and June activity numbers are due July 15 at 0200 GMT.
In 2023, economic growth should reach 5.3%.
The economy has started to slowly recover from the supply shocks caused by wide lockdowns, but there are still problems. The housing market is still down, people aren’t buying as much, and people are afraid of disease outbreaks.
From March to May, full or partial lockdowns in key Chinese cities, like Shanghai, shook up supply lines and business.
Analysts say it will be hard for China to reach its stated growth goal of 5.5% for this year without giving up on its goal of zero COVID.
EXPECTED SUPPORT
In recent weeks, the government has reduced company taxes and poured money into infrastructure projects.
Some analysts fear the central bank’s ability to loosen policy could be hampered by capital outflows as the U.S. Federal Reserve raises interest rates.
UBS analysts predict additional credit growth, mild LGFV financing ease, and more property policy ease.
“Policies have been small so far, and lingering (but easier) COVID limits will make it hard for macro policies to help.
In the third quarter, analysts predict the central bank will cut the one-year loan prime rate by 10 basis points.
A poll shows that the PBOC is likely to keep the reserve requirement ratio (RRR) for banks the same in 2022.
Inflation is expected to rise to 2.3% in 2022, up from 2.2% in April, but still below the official goal of 3%. In 2023, inflation is expected to level off at 2.3%.
(For more Reuters long-term economic forecast polls:)
Anant Chandak, Swathi Nair, and Jing Wang polled the audience; Kevin Yao reported; and Jacqueline Wong edited the piece.
