Int’l Economists Cut Chinese GDP in 2020 from the Disruption of Virus Outbreak!

An unexpected coronavirus outbreak has caused some analysts and economists to reduce the Chinese GDP growth forecast for 2020.

China National Health Commission issued Tuesday night that the total confirmed cases has risen to 24,324 and the death toll jumped to 490 cases.

The Chinese authorities extended the Lunar New Year holidays until mid-february and many cities likely to delay the resumption of school and business sectors to quarantine the virus spreading.

As the extended closure, the economic activities particularly a factory sector has to stop its manufacturing and the worsen is that many international companies rely on Chinese factories to make their products.

Therefore, some expertists are downgrading the forecast on Chinese economic growth in 2020 as the slowdown of Chinese consumption. Chinese people are encouraged to stay at home. 

In 2019, Chinese economic growth was 6.1%, dropped from 6.6% the year before.

Citigroup economists estimated China’s growth to down from the previous forecast of 5.8% to 5.5%. And said that the impact on economy will last only in the first quarter of this year.

Macquarie and Mizuho downgraded Chinese GDP growth from 5.9% to 5.6%. Macquarie is not concern about the loss in consumption, as any losses would be an one-off event. 

Mizuho has seen the economic activity are facing a greater scale of disruptions from larger and more transmissible outbreak.

Nomura analyst said that China’s annual GDP growth could be “significantly” lower than the 6.1% in 2019 and the economic impact of the coronavirus could be worse than during the SARS epidemic of 2002 to 2003.

Meanwhile UBS has reduced its forecast for China’s growth in 2020 from 6.0% to 5.5%. as they saw the aggressives measures will contribute to a near-term negative economic shock, as a result of curtailed consumer demand and supply chain disruptions.

However, Moody’s and Vanguard maintained their forecasts at 5.8% for China in 2020. Moody’s expects stimulus measures from the Chinese government to offset the low demand in the first quarter while Vanguard sees limited impact from the virus due to the swiftness actions from the Chinese government.