[Asia Economy Reporter Park Byung-hee] UBS and JP Morgan Chase have downgraded their economic growth forecasts for China this year, Bloomberg reported on the 24th.
On the same day, UBS lowered its forecast for China's economic growth rate this year from 4.2% to 3%, citing the impact of the zero-COVID policy.
UBS economist Tao Wang stated, "Mobility restrictions continue, and there is no clear exit strategy for COVID-19 prevention measures," adding, "Business and consumer confidence indices are declining, and demand will remain suppressed."
Economist Wang said that the ongoing zero-COVID policy hit economic activity in April, expecting China's Q2 economic growth rate to be only 1.4% year-on-year. He also noted that the Q2 growth rate is expected to be negative quarter-on-quarter, with an annualized rate of -8%.
Wang expects that as the Chinese government adjusts its prevention measures, growth will rebound in Q3 and Q4, but considering the characteristics of the Omicron variant, the government is unlikely to ease prevention policies as quickly as it did in 2020.
JP Morgan Chase, in a report dated the 23rd, downgraded China's economic growth forecast for this year from 4.3% to 3.7%. JP Morgan also expects Q2 growth to contract due to COVID-19 prevention measures.
Economist Zhu Haibin said, "The Omicron variant is spreading rapidly, and Chinese vaccines are not very effective at reducing infection rates," adding, "Unless China introduces more effective vaccines or accepts herd immunity, strict mobility restrictions will continue to be necessary."
With China's economic indicators weak in April and the government not abandoning the zero-COVID policy, major banks have been successively lowering their growth forecasts for China. Last week, Standard Chartered, Bloomberg Economics, Goldman Sachs, and Citigroup all downgraded China's economic growth forecasts simultaneously.
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