The sheer cost of China’s mass coronavirus-testing campaign since April is expected to exceed the full-year gross domestic product of nations such as Iceland and Cambodia, while giving China’s economy a much-needed shot in the arm, according to analysts.
“Since the beginning of June, we have stressed that we can be more optimistic about economic growth in the second quarter,” the note said, citing a number of factors such as central authorities’ inspections of provincial economies; more flexible coronavirus-control measures by localities; and a strong rebound in exports in May.
Beijing’s insistence on steadfastly adhering to its zero-Covid policy has indeed taken a heavy economic toll on the country in recent months, and some economists have even been “‘cancelled” for questioning the state’s handling of the coronavirus. In late May, the National Healthcare Security Administration said local governments should pay for all of their coronavirus-testing programmes with local finances, rather than the basic medical insurance funds.
Analysts with Nomura last week cut their forecast for China’s GDP growth rate in the second quarter from 1.8 per cent to 0.3 per cent, year on year. They cited Beijing’s reluctance to transition away from its zero-Covid strategy; the burden of regular virus testing; the sharp contraction of the property sector; the huge funding gap for the government; and a potential slowdown in exports.
Singapore Latest News, Singapore Headlines
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