The 2019 novel coronavirus outbreak and China’s efforts to stop the spread mean that its economy would grow slower this quarter than first thought, economists have said.
Goldman Sachs Group Inc, UBS Group AG and Macquarie Group Ltd are among those cutting their growth forecast for both the first quarter and the full year, while others expect material shocks to GDP.
China’s real GDP is now forecast to grow 5.8 percent this year, the median result in a Bloomberg survey showed, down from a median of 5.9 percent last month.
Chinese President Xi Jinping (習近平) last week told top officials that the country’s efforts to contain the outbreak had gone too far, threatening the country’s economy, days before Beijing rolled out measures to soften the blow, sources said.
After reviewing reports on the outbreak from China’s National Development and Reform Commission and other economic departments, Xi told local officials during a meeting of the Chinese Communist Party’s Politburo Standing Committee on Monday last week that some of the actions taken to contain the virus are harming the economy, two people familiar with the meeting said.
Xi urged them to refrain from “more restrictive measures,” the two people said.
Economists have also slashed South Korea’s growth forecasts as a slowdown in China caused by the outbreak threatens to hit exports of high-tech goods.
Citigroup Inc yesterday cut its estimate for annual GDP growth by 0.3 percentage points, while Goldman Sachs last week lowered forecasts by 0.1 percentage points, citing the coronavirus as the impetus.
The South Korean economy expanded 2 percent last year, the slowest pace since the global financial crisis, as exports sank amid US-China trade tensions. The Bank of Korea projected in November last year that growth would rebound to 2.3 percent this year.
“The Bank of Korea will probably revise down its growth forecast” when it meets later this month for an interest-rate decision, Seoul-based Shinyong Securities Co analyst Cho Yong-gu said.
Citigroup sees South Korea as the third most-vulnerable to a consumption shock in China after Hong Kong and Singapore.
South Korea exports twice as many high-tech goods to China than to the US, with chips accounting for half of the value, the Korea International Trade Association said.
Additional reporting by Reuters
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