China Reopening Earlier Than Expected Could Hit Supply Chains In The Short Term, But Boost Growth In 2023

• Mainland China’s reopening came sooner than expected for investors, and Goldman Sachs warns it will lead to short-term strains in the workforce and supply chains.
• According to mobility data analyzed by economists at Goldman Sachs, China is likely to see “weaker growth momentum during the frontloaded ‘exit wave’ on the back of surging infections, a temporary labour shortage, and increased supply chain disruptions,” it said in a note Tuesday.
• According to economists polled by Reuters, China’s factory activity is expected to have contracted in December when its National Bureau of Statistics releases its manufacturing Purchasing Managers’ Index on Saturday, Jan. 7. Economists predict the reading will come in at 48, below the 50-point mark that separates growth from contraction and in line with levels seen in the previous month. 
• Despite shorter-term concerns for China’s reopening, economists have a rosy outlook for China’s growth in the long run.
• The economists noted that the latest developments for reopening support the firm’s previous forecasts for China’s economy to grow 5.2% in 2023, after expanding 1.7% in the fourth quarter of 2022 on an annualized basis. The latest outlook was revised in mid-December when it raised its forecast for 2023′s full-year growth from a previous prediction of 4.5%.

(Source: CNBC)