Chinese economy to spiral south amid battle with Covid-19
China’s economic growth is forecast to slow, according to top analysts, as the country continues its battle with Covid-19.
The country’s GDP growth for the first quarter of this year was “moderate”, economists at ING have said, “but more pain will come” in the months ahead.
More Chinese cities are facing tighter controls, it was reported over the weekend, as officials pursue a ‘Zero-Covid’ stance to the highly transmissible Omicron variant.
Financial hub Shanghai, and its population of 26m, have been subject to the country’s latest surge in cases, which has seen people rely on the government to deliver food.
While the central bank said it will step up financial support for industries, business and people impacted by the outbreaks on Monday, ING economists said the fiscal aid has “not been enough to fully offset the damage to GDP created by the lockdowns.”
Economists added that “we may need to revise our GDP forecasts further if fiscal support does not come in time.”
It comes as China’s aviation industry remains grounded, as the country’s big three carriers – Air China, China Easter and China Southern – last week reported traffic falling 67 per cent for March year-on-year.
It contrasts with a better performance reported in Europe, according to analysts at market researcher Jefferies, where Eurocontrol reported that flights within Europe reached 81 per cent of pre-pandemic levels last week.
Analysts added that as China’s lockdowns will “continue to weigh on global traffic”, with domestic China representing 18 per cent of flights in 2021, and around nine to 10 per cent prior to the public health crisis.