Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that, according to a report released by the Bank of China Research Institute, the GDP growth rate of the mainland this year is expected to be about 3.2 percent, which will be lowered by 2.8 percentage points overall due to the Zero Covid control policy. Difficulties in Covid prevention, as well as the control measures disrupting the economy are important reasons for growth declining. The pressure of demand contraction will remain next year, and fiscal policy will be an important driving force for the economy. According to changes in a number of factors, the report makes three forecasts: pessimistic, baseline and optimistic. In a pessimistic scenario, the pandemic continues to break out, population movement is still largely restricted, and supply and demand are sluggish. Next year’s GDP could grow by about 3.6 percent. Under the baseline situation, the pandemic situation is generally controllable and its impact on the economy will gradually weaken. This may result in an increase of about 5.3 percent. Under an optimistic scenario, the impact of the pandemic control measures are greatly weakened, and the recovery of supply and demand is accelerated, reaching an increase of about 6.6 percent. Although the Chinese economy will continue to recover next year, it still faces challenges such as the weak foundation of domestic demand, the security of the supply chain, and the spillover risks of external economic and financial market fluctuations. Considering that the U.S. Federal Reserve will continue to raise interest rates next year, extra attention should be paid to its policy changes.
Source: HKET, November 30, 2022
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