Goldman Sachs experts have worsened the forecast for China's GDP growth for 2022, citing the prospects of limiting business activity in order to prevent the further spread of the Omicron strain.
"Given the recent increase in coronavirus cases in China - which may cause additional restrictions, and therefore negatively affect economic activity - we have worsened our forecast for GDP growth for the current year to 4.3% from 4.8%," analysts said, adding that consumption may suffer most from the new restrictions.
Meanwhile, analysts expect government policy easing to offset half of the resistance to Covid restrictions.
Goldman Sachs reported that local authorities continue to restrict travel and take other measures, despite the fact that the number of cases of the disease will remain well below the values of the first wave of the pandemic.
In general, many analysts do not expect China to abandon its zero tolerance policy for coronavirus in the near future, but there is a possibility that the situation will change in the fall, when the ruling Communist Party of China is going to hold a meeting.
In March, the Chinese government is expected to announce its GDP growth target for 2022, which is likely to be "at least 5%," which is higher than Goldman's latest forecast of 4.3%.
Goldman Sachs said that in order to synchronize the gap between actual growth and the GDP target, Beijing may announce new stimulus measures or abandon the growth target.