📝 See China Contracting By 1% Y/Y In 2Q, Expanding At 4.3% In 3Q: ING

Our GDP forecast of -1% YoY for the second quarter is confirmed by this activity data. The main reason is the long lockdown in Shanghai. This hurt retail sales the most, and also those factories that do not have "closed-loop operation"; if they don't have domitories for workers, they struggle to operate. Moreover, logistics were heavily disrupted as the movement in and out of Shanghai is difficult, and most logistics were used for transporting daily necessities and medical resources. Our base case is no more 1-month lockdowns in any China city after the second quarter of this year. This assumption implies a GDP growth rate of 4.3%YoY for 3Q22, with a jump in retail sales, faster delivery time for corporates and exporters, and significant support from infrastructure investments, and 3.6% for 2022. - ING Economics