The COVID-19 zero-tolerance policy adopted by China seems to be hurting its economy. Analytical forecasts of US multinational investment banks seem to confirm this trend.
According to CNN, Goldman Sachs, observing China’s zero case approach, has estimated a decline in the economy of at least 0.5% from 4.8%, which is about half the growth rate it had projected last year. These projections are based on China’s announcements regarding its GDP data for the fourth quarter and the whole of 2021.
Morgan Stanley, another US multinational investment bank, presented similar data on China’s economy, lowering its forecast to 4.2% from 4.9% for the first quarter of 2022 if additional lockdowns are announced. Moreover, the analysis indicated the overall costs of Omicron zero-tolerance policy outweigh its benefits.
The more profound consequences of the zero-tolerance policy and repeated lockdowns are evident in the problems Samsung and Micron’s chip production lines are facing. The policy effects also become apparent in the ship congestion already seen in Chinese ports, leading to crises in global supply chains.
Finally, according to Nomura Holdings, the cost of China’s zero-tolerance policy on COVID will also be affected by the upcoming Winter Olympics in Beijing. However, its projections for the Chinese GDP show 2.9% growth for the first quarter and 4.3% for the entirety of 2022.
