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Economists cut China’s growth forecast on coronavirus impact

As the situation worsens.

The outbreak of the coronavirus and China’s efforts to stop the spread mean the economy will grow slower this quarter than first thought, according to economists.

Goldman Sachs Group, UBS Group and Macquarie Group are among those cutting their growth forecast for both the first quarter and the full year, while others expect material shocks to gross domestic product.

Reflecting the worsening situation, Barclays Bank‘s Jian Chang now sees a worst-case scenario knocking 2.2 percentage points off first-quarter growth, a downgrade from her January 22 call that the impact would be “transitory” and limited to certain sectors.

Economists forecasts about the economy

Firm Report date 1Q – new 1Q – old 2020 – new 2020 – old Comments
Pantheon Macroeconomics Feb. 7 2 ppts drop (to below 2% from Pantheon’s own estimate of 4% in 4Q) 3.4%   Near-$100B
hit to Chinese GDP in 1Q
Nomura Feb. 6 3.8% 5.8% 5.6% 5.7% Impact will be bigger than SARS, with a short-term slump and V-shaped recovery
S&P Global Ratings Feb. 6 Down by 1 ppt 5% 5.7% A large, temporary blow to
China’s economy
Oxford Economics Feb. 3 Down by more than 2 ppts 6% 5.4% 6% High economic impact but short-lived
Macquarie Feb. 3 4% 5.8% 5.6% 5.9% “Getting worse before getting better”
UBS Feb. 3 3.8% 5.9% 5.4% 6% Forecast biased to downside risk
Bloomberg Economics Jan. 31 4.5% 5.9% 5.7% 5.9% Bigger blow if virus extends into 2Q
Standard Chartered Jan. 31 4.5% 6% 5.8% 6.1% Infection under control sooner than SARS
Goldman Sachs Jan. 31 4% 5.6% 5.5% 5.9% Debt-intensive stimulus expected
Citi Jan. 29 4.8% 5.9% 5.5% 5.8% Policy intervention “critical”
 
© 2020 Bloomberg L.P.
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