Goldman lowers China's GDP target for 2022
Exports are not the problem
Gabriel Thomas (GT)May 8, 2025
Goldman Sachs on Tuesday lowered its forecast for China's economic growth in 2022 in anticipation of increased restrictions on operations to contain the Omicron variant of the Covid-19 virus.
In recent days, China has reported some omicron cases in the city of Tianjin and Anyang in Henan province, prompting at least partial lockdowns. Xi'an, a major city in central China, has been in lockdown since late December to contain a Covid outbreak which authorities said were unrelated to Omicron.
"In light of recent Covid developments - in particular the likely higher average restrictions (and thus economic costs) to contain the more infectious Omicron variant - we are revising our growth forecast for 2022 down to 4.3% from a previous 4.8%", Goldman Sachs analyst Hui Shan and a team wrote in a report late Tuesday.
Consumption will likely be hit the hardest, while exports will be less affected, analysts said, anticipating limited supply chain disruptions. They expect the easing of government policies to offset half the burden of Covid restrictions and assume the negative impact will be concentrated in the first quarter.
China's economy shrank in the first quarter of 2020 as more than half of the country was shut down during the first coronavirus outbreak. However, the temporary closures coincided with the Lunar New Year festival, which allows businesses to remain closed for a month.
In the second quarter of 2020, the virus was under control in the country and the economy returned to growth.
Nearly two years later, local authorities are tightening travel restrictions and other measures, despite the small number of cases compared to the first outbreak and a smaller outbreak in the summer of 2021, Goldman analysts said.
"Containing the domestic Covid situation remains a top priority for local authorities," the report said.
Maintaining stability is key, China's leaders stressed at an annual economic planning meeting in December.
Many analysts expect China to maintain its zero-tolerance policy to control the pandemic at least until the fall. At that time, the ruling Chinese Communist Party will hold a session where President Xi Jinping is expected to receive an unprecedented third term.
With the Beijing Winter Olympics starting on Feb. 4, authorities want to make sure the Lunar New Year celebrations don't contribute to further outbreaks. The vacation travel season lasts from January 17 to February 25, Goldman analysts point out.
Will Beijing miss its GDP target? Chinese authorities are widely expected to announce a growth forecast of at least 5% for 2022 at their annual meeting in March.
That's above Goldman's revised GDP forecast of 4.3%, analysts said.
To close this potential gap between actual growth and the GDP target, Beijing could embark on more stimulus measures or abandon the growth target -- as it did in 2020, according to the bank's analysts.
They also pointed to previous instances where weakness in some growth measures did not stop the official GDP figure from meeting the government's target.
The accuracy of China's official economic data is often questioned.
"Finally, of course, it could turn out that we overestimate the impact of Omicron and Covid on growth in general, given the public health experience with the virus and the ongoing improvements in border quarantine regimes and domestic virus control." Goldman analysts.
