On the revision, the agency says that the continued strict lockdowns are biting at economic activity across the country, leading to weaker growth in general. Domestic employment, investor sentiment, supply chains, and broader capital markets are all being impacted and the mounting confluence of credit headwinds from tighter Fed policy and the Russia-Ukraine conflict heightens the risks.
The base case for their China 2022 GDP growth forecast is now 4.2% from 4.9% previously. But in the event where lockdowns extend to another "economically important" city, the growth rate could fall to 3.5%.
Looking at the current situation, S&P Global says that recent restrictions have had a "significantly more severe economic hit than most prior lockdowns in China". Adding that "the effect on manufacturing output and supply chains has been large". A more detailed and comprehensive view can be found in the report here.
