People shop at Haikou Riyue Plaza Duty Free Shop in Haikou, South China’s Hainan province, Jan 27, 2023. [Photo/VCG]
China’s adjustment of its COVID-19 pandemic response will not only speed up its own economic recovery, but also boost global economic growth, said a report issued by Goldman Sachs Research on Friday.
“Our economists now forecast China’s GDP to grow by 6.5 percent in 2023 on a Q4/Q4 basis,” up from the previous forecast of 5.5 percent made at the end of last November, according to the report.
On top of that, global GDP could be raised by one percent by the end of 2023 due to China’s adjustment, it said.
“The global growth backdrop has brightened,” Goldman economists Joseph Briggs and Devesh Kodnani were quoted as saying by the report. The two economists have viewed “the more rapid pace of China’s reopening along with a waning drag from global financial conditions and lower European gas prices” as good news for the world.
China’s adjustment will impact global growth through “three direct channels,” including increased domestic demand in China, and higher demand for international travel and commodities from China, said the report.
Domestic demand in China in 2023 is likely to increase by up to five percent, and the return in goods demand could provide a moderate boost of around 0.4 percent to GDP in most Asia-Pacific economies, it said, adding that a normalization in travel patterns should lead China’s travel trade deficit to increase and boost foreign GDP. The report also said China’s recovery will likely boost commodities demand and prices.
Briggs and Kodnani “anticipate the broader spillover effects from Chinese growth — including more favorable global financial conditions and increased trade with other countries — to be larger,” it added.