COVID Surge in China Dampens Economic Growth
Despite the potential for growth in 2023, the road to recovery for China's economy won't be a straight path. China lifted many restrictions under its zero-COVID after roughly three years—resulting in a surge of cases across the country. Strict COVID lockdowns dampened economic growth and hurt global supply chains, but now the surge in infections is having a similar effect.
"China's economy ended the year in a major slump as business and consumer spending plunged in December, with more disruption likely in the first few months of the year as COVID infections surge across the country," reads an article from Bloomberg.
But some economists expect an acceleration in economic growth once cases peak. "China's growth prospects have been improving with the reopening accelerating. Overall, the darkest hour is gone," Zhou Hao, chief economist at Guotai Junan International Holdings, told the news outlet.
However, China will face a large hurdle before that point as COVID cases spread. China's economy is projected to contract by 0.8% in the first quarter of this year and rebound in the second quarter, with recovery in March and an overall 5% growth for 2023, per CNN. "In the initial phase, I believe the reopening may unleash a wave of COVID cases that could overwhelm the health care system, dampening consumption and production in the process," said Bo Zhuang, senior sovereign analyst at Loomis, Sayles & Company, a Boston-based investment firm.
