Goldman Sachs trims China’s 2023 GDP forecast to 4.5%, keeps 3.0% growth expectations for 2022

After a slew of negatives from the covid and the central bank actions, Goldman Sachs (GS) revised its China Gross Domestic Product (GDP) forecasts for 2023 to 4.5% versus 5.3% previous projections. Bloomberg quotes GS economists led by Hui Shan while stating, “This year’s prediction of 3% was maintained.”

The update also expects that Beijing will stick to its stringent Covid Zero policies through at least the first half of next year.

Key quotes

China is unlikely to begin reopening before the second quarter of next year as it tries to put several steps in place first, such as higher vaccination rates for elderly and increased manufacturing of cheap and effective Covid pills.

Any easing of Covid restrictions will probably be followed by a jump in infections, reduced mobility and possible supply chain disruptions, which will curb economic activity.

China is likely to experience a surge in infections upon a full reopening given the lack of infection-induced immunity and the high transmissibility of omicron

Therefore, we would expect a modest drag on growth in the first three months of reopening followed by a steep recovery thereafter.

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