Morgan Stanley has degraded this year’s forecast for China’s economic growth to 4.2% as Beijing continues to pursue “dynamic zero COVID” policy.

According to Hong Kong 01 on April 26, data from Morgan Stanley’s latest report show that the downgrade this time is the second adjustment of the month.
Morgan Stanley has already lowered its growth forecast for China from 5.1% to 4.6% earlier this month.

The U.S. banking giant noted that the “dynamic zero COVID” policy, a type of closed-loop control management, slowed down the recovery of production activity and disrupted the economy in China, leading to the cuts in GDP prediction this time.

The report also said that Beijing has no intention of abandoning this policy, despite the huge economic costs it has incurred.

Data of China’s activity last month showed weak growth and many overseas brokerage firms also had to adjust their previous forecasts for Beijing this year.
Reuters reported that Barclays, on April 19, degraded their already below-consensus prediction to 4.3%, from 4.5% before.

Bank of America cut its previous forecast from 4.8% to 4.2%.
Nomura Holdings Inc., on April 21, downgraded its forecast to 3.9%, from 4.3% previously.

Last week, the International Monetary Fund cut China’s growth forecast to 4.4% for 2022.

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