(Bloomberg) -- Morgan Stanley cut its economic growth forecast for China to zero for the current quarter versus the final three months of 2021 and predicts Beijing will miss its annual target this year thanks to restrictive policies to bar the spread of Covid.
The Wall Street bank lowered its 2022 forecast to a 5.1% gain for gross domestic product -- down from 5.3% previously and below the Chinese leadership's target of about 5.5%. It previously saw GDP rising 0.6% this quarter compared with the previous three months. Year-on-year, it now expects GDP growth of 3.9% this quarter, down from 4.5% seen earlier.
Morgan Stanley made the changes after China placed the city of Shenzhen into lockdown for at least a week and forbade people from leaving Jilin -- the first time the government sealed off an entire province since early 2020.
“The double lockdowns sent a clear message that Beijing is prioritizing Covid containment over the economy, and a recalibration of its Covid strategy will likely be delayed,” Morgan Stanley economists led by Robin Xing wrote in a note dated March 13. “Higher infrastructure spending and an easing of housing policies can be expected, but the larger issue remains finding a Covid exit strategy.”
©2022 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
