According to my preliminary estimates, the worst-case scenario is that the epidemic lowers GDP growth in the first quarter by a third or half, leaving the figure 2-3 percentage points lower than in the first quarter of 2019 But if things start to look up in the second quarter, the ensuing rebound will partly offset that drop. And with the necessary macroeconomic policy adjustments in place, economic growth will accelerate again during the second half of the year.
Provided there are no further external shocks, continued policy loosening should limit the full-year decline in GDP growth to 0.5-1 percentage point. That would imply a 5-5.5% full-year economic expansion in 2020, which is still largely in line with China’s current growth trend. But it is not yet clear whether the Chinese government, currently preoccupied with tackling the epidemic, will cut its GDP growth target for this year accordingly.
Zhang Jun is dean of the School of Economics at Fudan University and director of the China Center for Economic Studies, a Shanghai-based think tank.