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FILE PHOTO: An electronic display showing the China GDP indexes is seen on a street in Shanghai, China October 16, 2021. Picture taken October 16, 2021. REUTERS/Aly Song/File Photo

March 18, 2022

(Reuters) – The recent surge in COVID-19 cases across China is likely to have a minimal impact on the country’s GDP this year, two brokerages said in their reports, while adding it could hurt demand for some commodities.

China reported 2,388 new local cases with confirmed symptoms on March 17, almost double the count a day earlier, as it battles its worst coronavirus outbreak since the virus first emerged in Wuhan in 2020.

Credit Suisse said in a report late Thursday it expected a loss of 0.03 to 0.05 percentage point to GDP growth per week of the lockdown, on the current size of the lockdown.

Earlier this month, China forecast a slower economic growth of around 5.5% this year as domestic headwinds, including a downturn in the country’s vast real estate sector and lacklustre consumption, cast a pall on its outlook.

“We view China’s recent COVID cases and restrictions as a potential demand-side shock that could partly offset the Russia/Ukraine supply-side shock to some commodities,” Credit Suisse economists said.

Separately, J.P.Morgan said it expected 20% of China’s GDP to undergo a “more severe economic shock” associated with the “zero-COVID” policy, but expected it to recover in May and June.

The brokerage forecasts China’s full-year GDP growth to be 4.9%, down from its previous estimate of 5.1%.

(Reporting by Siddarth S in Bengaluru; Editing by Rashmi Aich)

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