Wang Tao: How China’s Covid Lockdowns Will Impact Its Economy

We downgraded our 2022 China GDP growth forecast to 4.2% from 5% on April 18 on the Covid shock, especially widespread logistics delays, production suspensions and notable damage to consumption and service activities. Based on our UBS China Activity Tracker and high frequency data monitor, we pulse check China's economy to examine the latest Covid impact.

The latest omicron wave has likely peaked, Shanghai’s lockdown continues, mobility restrictions have tightened. China’s daily number of new confirmed cases and asymptomatic infections likely peaked in mid-April, and now is trending downward at a slow pace. Although the number of medium- to high-risk areas has dropped notably, de facto mobility restrictions tightened in many areas in April, including the Shanghai lockdown since end-March. And some other cities have implemented de facto soft lockdowns for several weeks once a few new Covid cases were confirmed.