Quantifying the impact of China's COVID-19 restrictions

The effects of COVID-19 on China are increasingly clear. China's vital signs are fading fast. The economy is suffering. Inflation is increasing. But to what extent? What is the impact of COVID-19 restrictions on China's economy?<br><br>The estimates are substantial. COVID-19 has had massive impacts on China's economy. The restrictions are estimated to have shaved off 6-7% of China's GDP in the first four months of 2023. That's a total of more than $350 billion. To put this into perspective, that's equivalent to the entire economy of Chile. China's economy is expected to grow at 3.9% in 2023, if not for the restrictions which would have contributed 3-4% more to China's GDP.<br><br>COVID-19 restrictions have also limited Chinese imports. At the same time, exports have fallen by 9.1% in May. That's a massive 30.6% decrease from last year. The Port of Shanghai had to be shut down because of lockdowns. This has caused significant delays in international shipments. Furthermore, the restrictions have limited China's capacity to supply the world with goods. The global supply chain has been significantly affected by these restrictions.<br><br>The impact of COVID-19 is not just limited to China. The global economy is experiencing significant headwinds. The global economy is estimated to grow 3.2% in 2023, down from 3.8% in 2022. The COVID-19 restrictions have contributed to the sharp decline in global economic growth. If not for these restrictions, the global economy would have been expected to grow by 4.2%. That's an additional 1% of global growth that could have been achieved if not for these restrictions.<br><br>In conclusion, the impact of COVID-19 restrictions on China's economy is substantial. The restrictions have caused a significant decline in China's GDP, limited imports, and hurt exports. The impact of COVID-19 is also felt globally, contributing to a sharp decline in global economic growth. The restrictions have caused significant delays in international shipments, hurt global supply chains, and contributed to inflation. The sooner that the Chinese government can lift these restrictions, the better for China and the global economy.