According to Bloomberg, Nomura cut China’s growth forecasts for this year and next, citing a “slow, costly, and bumpy” reopening of the country amid an ongoing COVID outbreak.
The country’s GDP forecast for this year was lowered to 2.8% from 2.9%, while next year’s growth projection was slashed to 4% from 4.3%. The numbers from Nomura are below the Bloomberg poll of 3.3% for 2022 and 4.8% for 2023.
Nomura’s Chief China Economist Ting Lu said, “In GDP terms, nearly 20% of China’s economy was negatively affected by Covid controls as of Monday, close to the high of 21.2% recorded in mid-April during Shanghai’s lockdown.”
Nomura estimates that the lockdown has affected one-fifth of China’s GDP, more than the UK’s total GDP. Nomura analysts noted, “Shanghai-style full lockdowns could be avoided, but they might be replaced by more frequent partial lockdowns in a rising number of cities due to surging COVID case numbers.”
China’s daily COVID-positive cases have recently surged to a record high, exceeding the previous peak in April’s Shanghai city-wide lockdowns. The rising infections result from a more targeted approach to containing the virus.
The city of Zhengzhou, where workers protest at Apple’s supplier plant, rolled back to daily mass testing in eight districts for millions of residents.
In September, another investment bank, Goldman Sachs, lowered its forecast for China’s 2023 GDP to 4.5% from 5.3% while keeping its 3% growth forecast for 2022.
China’s official data last month showed that the country’s gross domestic product rose 3.9% year on year in the July-to-September period, rebounding from a near-zero increase in the previous quarter of 0.4%.
Even though the data shows GDP growth, it is still far below the official target of 5.5% as the country faces multiple challenges.