As Shanghai further enforces lockdowns in an attempt to slow down the latest COVID-19 outbreak, economists are raising concerns about a major disruption for China's economy.
“If China continues to adopt a zero-COVID policy, such on-and-off lockdowns will cause disruptions to China’s economy and erode the resilience of its supply chains,” Morgan Stanley's Chief China Economist Robin Xing said in Globe Banner.
According to Morgan Stanley, the city is home to China's largest port and serves as a regional headquarters for hundreds of multinational companies. If the zero-COVID policy continues, the impact is likely to shave 0.6 percentage points off China's growth figures this year, the firm said.
A UBS Financial Services economist has tempered Chinas growth forecast from 5.4% to 5.0%, while warning that it can dip as low as 4% if the war in Ukraine and COVID lockdowns continue, according to The Wall Street Journal.
The Journal further reported that even prior to the new outbreak in Shanghai, multiple investment banks predicted that China would miss its growth target by roughly 5.5% as a result of the Omicron variant and the Russia and Ukraine war.
According to estimates by Goldman Sachs, areas that are under coronavirus restriction account for approximately one-third of China's overall output, the Journal reported.