© Reuters. FILE PHOTO: A cargo ship carrying containers is seen near the Yantian port in Shenzhen, following the novel coronavirus disease (COVID-19) outbreak, Guangdong province, China May 17, 2020. REUTERS/Martin Pollard
BEIJING (Reuters) – China’s export growth likely lost more steam in December as a key economic driver continues to weaken, while imports also slowed and concerns over the Omicron variant weighed on the demand outlook, a Reuters poll showed on Thursday.
Exports in December were expected to have risen 20.0% from a year earlier, according to the median forecast of 29 economists in the poll, still robust but moderating from a 22.0% expansion in November.
Imports were forecast to have risen 26.3% from a year earlier, the poll showed, compared with 31.7% in November.
The customs authority will release the data on Jan. 14.
China’s booming exports outperformed expectations for much of 2021 and buoyed growth in the world’s second-largest economy as several other sectors were faltering, but analysts expect shipments to slow eventually as an overseas surge in demand for goods eases and high costs pressure exporters.
China has also seen a handful of Omicron cases as it battles small-scale outbreaks in several regions, adding uncertainty to the outlook.
“Even Hong Kong and mainland China, shielded by some of the world’s toughest external quarantine measures, have seen Omicron slip through their defences,” said Frederic Neumann, co-head of Asian Economics Research at HSBC, in a note.
Omicron could cause “hugely disruptive” supply chain stumbles in Asia if it leads to large numbers of sick factory workers or tough lockdown measures, said Neumann.
The port city of Tianjin reported an increase in COVID-19 infections on Thursday as it stepped up efforts to rein in an outbreak that has spread the highly transmissible Omicron variant to another Chinese city.
China’s vice commerce minister said on Dec. 30 that the country will face an unprecedented degree of difficulty in stabilising foreign trade in 2022, as other exporters ramp up production and amid a less-favourable base of comparison.
China staged an impressive rebound from the pandemic but there are signs the recovery is losing steam amid regulatory crackdowns and debt troubles in the property sector.
Factory activity grew at its fastest pace in six months in December, driven by production hikes and easing price pressures, but a weaker job market and business confidence added uncertainty, a private survey showed.
The central bank has said it will keep monetary policy flexible as it seeks to stabilise growth and lower financing costs for businesses amid growing economic headwinds.
China would not necessarily gain export market share from Omicron-related disruptions hurting competitors, as it did during previous waves of the pandemic, said analysts at Morgan Stanley (NYSE:) in a note.
“Supply chains in other Asian exporters may have turned more robust and could better withstand disruptions from Omicron.”
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