Lockdowns one after another and trade conflicts do not allow the Chinese economy to stretch its wings. Leading analysts downgrade their forecasts for China’s GDP for the full 2022. It seems that more downward revisions will follow. Experts at Goldman Sachs and Nomura were the first to present their gloomy forecasts.
In essence, China’s economy will complete the year 2022 with tepid economic growth. Both Goldman Sachs and Nomura foresee contraction in the national economic output of the second-largest global economy. Goldman Sachs downgraded its annual GDP forecast from 3.3% to 3%, whereas Nomura slashed its forecast from 3.3% to 2.8%. Experts found some proof that the Chinese economy is losing momentum in light of the official economic metrics for July and amid brief energy supply crunches during the unexpectedly hot and dry summer. China is suffering from the most protracted heatwave in the last few decades. The scorching heat puts a great strain on power plants and cripples the manufacturing activity in the country. Besides, analysts at both investment banks pointed out another resurgence of COVID-19 and dwindling investments in real estate.
Nomura with its lowest estimates of China’s GDP growth said that Beijing is expected to pursue its zero-tolerance policy towards COVID-19 until March 2023. This standpoint is likely to remain a serious culprit for the real estate sector. Another factor to derail the normal pace of an economic recovery is soaring electricity prices. For example, the authorities in the Jiāngsū province recently raised tariffs for almost 30 large plants by 0.5 yuan (7 cents) per kilowatt hour.
