The Chinese zero-COVID policy is projected to bring about another downturn for global supply chain

Supply chain disruptions have been prolonged driven by the Chinese strict zero-COVID policy, according to one economist. The challenges have been found to last more than a year now however, are projected to ease in the coming months of the year. So the economy is anticipated to start witnessing a material downward pressure across things such as producer prices, and input prices. However, given the Chinese zero-COVID policy and how they tend to shut important ports and other pivotal factories is what is expected to increase disruption.

Beijing has been found to enforce a stricter zero-COVID policy since the pandemic has begun in 2020. It comprises travel restrictions and strict quarantines, whether it's inside a city or with other countries for controlling the outbreak. Restrictions have been focused on containing COVID-19, which has impacted shipping and manufacturing operations worldwide, thus exacerbating the supply chain crisis. Some renewed concerns have started to surface amid highly infections omicron variant, which is further expected to bring about another blow for the shipping industry. China’s zero-COVID policy has increased the downside risks for material improvement across supply chains, stating that there will be important ramifications for inflation and central bank policy-making in the coming months.

China, the world’s second-largest economy, last year was found to shut a key terminal across the Ningbo-Zhoushan port, which happens to be the third busiest in the world. It came after one employee got infected with COVID, and was the only second time that China suspended operations for its key ports. On Tuesday, Goldman Sachs had cut 2022 forecasts for China’s economic growth to just 4.2%, which is down from 4.8%. The U.S. investment bank’s analysis has been based upon the expectations that China is projected to increase restrictions for its business activity for containing the omicron variant.