UBS cuts China's GDP growth forecast on COVID restrictions

(Reuters) - UBS on Tuesday trimmed its forecast for China's economic growth this year by 120 basis points to 3%, as strict COVID-19 restrictions hit the country hard.

The forecast cut comes a day after J.P. Morgan lowered its China full-year growth forecast to 3.7% from 4.3%, saying a deeper-than-expected contraction was now likely this quarter due to the country's COVID-19 lockdowns.

Lockdowns in numerous Chinese cities since the beginning of April has disrupted various global supply chains and hurt its own economy.

"The lingering restrictions and lack of clarity on an exit strategy from the current COVID-19 policy will likely dampen corporate and consumer confidence and hinder the release of pent-up demand," said UBS analyst Tao Wang.

Shanghai on Saturday pushed ahead with plans to restore part of its transport network in a major step towards exiting a weeks-long COVID-19 lockdown, while financial hub Beijing was playing defence in an outbreak that has persisted for a month.

However, Wang said the easing of COVID-19 restrictions would not be as rapid as in 2020, given the fast-spreading nature of the Omicron strain.

(Reporting by Subhadeep Chakravarty and Aniruddha Ghosh in Bengaluru; Editing by Maju Samuel)