China’s Economy Loses Steam Just as Omicron Spreads: Eco Week

China’s Economy Loses Steam Just as Omicron Spreads: Eco Week

Bloomberg

China’s economy, still hurting from a property market slump, is now bracing for a hit from partial shutdowns as authorities try once again to halt the spread of Covid-19.

Gross domestic product data due Monday will likely show the impact of the real-estate downturn in the fourth quarter, as well as electricity shortages. Growth may have slowed to its weakest in more than a year, according to economists in a Bloomberg survey, even before the emergence of omicron-variant cases this month.

Beijing’s hardline approach to stamping out coronavirus cases through lockdowns and quarantines is curbing consumer spending and disrupting some production and shipping operations. Goldman Sachs economists have already cut this year’s growth forecast for China to 4.3% due to the increased difficulty of containing the highly-contagious new variant.

The gloomy outlook is fueling speculation of monetary stimulus, with officials already paving the way with more dovish signals. Some analysts are betting that an interest-rate cut could come as soon as Monday as the central bank looks to front-load its support.