Goldman Sachs cuts China 2022 growth estimate to 4.3% on Omicron covid woes

With China facing an uphill battle to contain the rapid spread of the highly-contagious Omicron covid variant, Goldman Sachs economists, including Chief China economist Hui Shan, lowered their 2022 GDP growth projection for the dragon nation.

Key highlights (via Bloomberg)

“Goldman Sachs Group Inc. cut its forecast for China’s economic growth this year to 4.3%.”

“The downgrade from the bank’s previous projection of 4.8% incorporates a 0.9 percentage point drag from Covid-related restrictions, which will be partly offset by monetary and fiscal easing.” 

“The negative impact from infections and restrictions as China pursues a policy of virus elimination will mostly be felt in the first quarter of 2022.”            

“See a rebound in the following three months, assuming that outbreaks can be controlled more easily after the winter months and as booster vaccinations are more widely deployed.”

“Goldman maintained its call for a 50-basis-point cut in the reserve requirement ratio in the first quarter. “