Growth forecast for China cut amid toll of lockdowns

BANK of America has slashed its forecast for Chinese growth as a result of the country’s strict zero-covid policies.

Analysts at the bank predict China’s economy will expand just 3.5pc this year, down from a forecast of 4.2pc.

They said lockdowns had “inevitably brought new disruptions,” adding: “Both investment and consumption demand have been impaired by the shock and resultant logistical bottlenecks, along with property market turmoil and labour market woes.”

The forecast suggests growth will fall below Beijing’s target of 5.5pc. But forecasters said the pickup in GDP would be strong in 2023 – at 6pc, versus a previous estimate of 5pc – as China unwinds restrictions following the Communist Party Congress later this year.

The bank’s forecast is based on the expectation that “no major city will be under full lockdown and the government will gradually relax Covid curbs in November”. But it warned the slowdown could prove more severe if Covid continues to cause disruption, particularly if it leads to more city lockdowns. Then, growth could be 2.5pc, it said.