May 24, 2022 06:08 GMT
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- Uncertainties related to economic forecasts are high as:
- Implementation of zero-COVID policy remains the biggest uncertainty, including the risk of prolonged disruption of economic activity and the risk of recurring Omicron waves;
- The government may introduce additional policy stimulus within the next few months, e.g., supplementary fiscal deficit, fiscal transfer to households or more aggressive housing policy relaxation.
- Investors’ assessment of the economic outlook is biased to the bearish side, for two important reasons:
- The “data-smoothing” practice and concerns about quality of the NBS statistics; and
- A larger component of “unproductive GDP” related to the cost of zero-COVID policy implementation, which tends to increase the economic/operational costs of business activities.