China’s latest Covid-19 outbreak could hit first-quarter GDP by at least half of a percentage point, Citi analysts predicted in a report Tuesday.
Beijing's zero-Covid policy measures have prompted analysts to issue reports about growing risks of drags on the world's second-largest economy, even if few are able to put a number on it yet."We believe the omicron wave presents both risks and opportunities for China," Bank of America Securities' China equity strategy team said in a report Tuesday.
So far, the analysts' research and checks with local factories reveal limited impact on the production of chips, autos, apparel and beer, among other industries. The Android smartphone supply chain could be among the harder-hit, the report said. But, like other industries, production could be shifted to other locations.
"March may be a different picture depending on how long the restrictions in Shenzhen and Jilin last for," said Francoise Huang, senior economist at Euler Hermes, a subsidiary of Allianz."If it just lasts for one or two weeks, it might become a blip in the data." Although Jilin's capital of Changchun is an auto manufacturing center, contribution to China's GDP is 0.65%, less than Dongguan's 0.95% and Shenzhen's 2.73% share, according to Citi.China has upheld a zero-Covid policy of travel restrictions and swift lockdowns of neighborhoods or office towers to control outbreaks. At least in Beijing, individuals with a travel history linked to confirmed cases may need to quarantine at home for a week or more.
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