Morgan Stanley Slashes China GDP Forecast, Citi Warns of Risks
(Bloomberg) -- Morgan Stanley cut China's 2022 economic growth forecast sharply, while Citigroup Inc. warned of risks to the second-quarter outlook as the nation sticks to a strict Covid Zero approach to combat infections.
Economists at Morgan Stanley led by Robin Xing downgraded their full-year forecast to 4.6% from 5.1% on Friday. China's “strict adherence” to its no-tolerance policy is expected to stay in the coming months “despite the more transmissible omicron,” they said.
Read More: Mapping China's Escape Routes From the Covid Zero Trap
Citigroup economists said gross domestic product growth could take a hit of as much as 0.9 percentage points in the second quarter. On Friday, a private gauge of manufacturing activity dropped in March to the worst level since the pandemic's onset.
Morgan Stanley cited low overall vaccination rates for third doses, especially among the elderly, as a reason why authorities will likely stick with Covid Zero policies for most of this year.
“Policy makers are likely to err on the side of taking up stricter lockdowns if necessary,” they wrote in a note. “This means all-out easing efforts would still be blunted by successive Covid outbreaks and related shutdowns.”
In their base case scenario, the economists expect the recovery to mostly happen in the last quarter of the year, given an expected political reshuffling and the time needed to vaccinate the nation's elderly.
In a worst-case scenario, China could delay its exit from Covid Zero until the first half of 2023, “and recurring lockdowns could result in more severe supply chain disruption and merely 4% GDP growth,” they said.
©2022 Bloomberg L.P.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
