TAIPEI — Due to further Covid lockdowns, Nomura has once again lowered its China GDP prediction.

Following reports of fresh local illnesses, several cities, notably the innovation capital Shenzhen, have strengthened Covid regulations. The city of Chengdu in central China has issued a stay-at-home directive since last week as health officials carry out widespread virus testing.

As of Tuesday, these Covid limitations were affecting nearly 12% of China’s total GDP, up from 5.3% the previous week, according to a report by Nomura’s top China economist Ting Lu and a team. According to the experts’ new model, which weighs the GDP of impacted regions according to how strict the regulations are, this is the case.

Based on this growth, Nomura reduced its GDP projection from the 2.8% prediction made in August to 2.7%.

“We did not expect growth to weaken at such a pace back [on Aug. 17], when we lowered our Q3 and Q4 GDP growth predictions,” the analysts added.

This year, major investment banks have frequently lowered their predictions for China’s GDP, particularly in the wake of Shanghai’s two-month-long lockdown. The forecast from Nomura was the lowest, and it often cuts its estimates before other companies do.

323 locally transmitted Covid cases with symptoms and 1,247 cases without symptoms were recorded for Tuesday in mainland China. Infections were detected from the southern coast to north China.

Region-specific limitations on commerce and social interaction exist. While other regions of the country have delayed the reopening of schools or even forced citizens to stay at home, many places, like Beijing, merely need to conduct routine viral checks.

According to the Nomura analysts, “what is growing more worrisome is that Covid hotspots are continuing to shift away from many rural regions and cities – with seemingly less economic value to the country – to provinces that contribute considerably more to China’s national economy.”

They issued a warning after discovering that the impact of Covid on China’s GDP was rapidly approaching the levels observed during the siege of Shanghai in April and May. According to Nomura’s analysis, the weighted impact on GDP at the time was just over 20%.