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China’s Covid Zero Will Drag Growth to Below 4%, Nomura Says

  • Growth rate would be one of the worst in decades if realized
  • Nomura lowers second-quarter growth rate to 1.8% from 3.4%
Health workers at a neighborhood during a Covid-19 lockdown in Shanghai on April 18.

Health workers at a neighborhood during a Covid-19 lockdown in Shanghai on April 18.

Photographer: Hector Retamal/AFP/Getty Images

Updated on

Nomura Holdings Inc. cut its forecast for China’s economic growth rate to 3.9% as the country’s insistence on sticking with Covid Zero disrupts the economy more severely than monetary policy can provide support. 

The estimate was lowered from 4.3% due to “rapidly” worsening high-frequency data for April and logistics problems as a growing number of cities fully or partially lock down to contain the virus. Meanwhile, Beijing has shown no sign of a move away from its Covid Zero strategy soon, Nomura’s economists including Lu Ting wrote in a note Thursday.