China reopening may boost GDP in Hong Kong, Thailand and Singapore, Goldman says
Hong Kong, Thailand and Singapore will likely be the biggest beneficiaries as China drops its Covid-19 restrictions and reopens its economy, driving up demand for imports and overseas travel, according to Goldman Sachs Group.
Hong Kong could see an estimated 7.6 percent boost to its gross domestic product (GDP) as exports and tourism income climb. Thailand’s GDP may get a lift of 2.9 percent, said Goldman Sachs economists.
The impact on Singapore is smaller, at 1.2 percent, followed by 0.7 percent for Malaysia, they said.
The estimates are based on the assumption that China’s reopening currently under way will increase the nation’s domestic demand by 5 percentage points and push international trips back to 2019 levels, Goldman’s economists wrote in a note on Sunday.
“China’s reopening is likely to have the most positive effect on international travel followed by stronger goods imports,” they said.
Hong Kong will likely see a boost to travel spending amounting to 6 percent of its GDP, while the impact on Thailand is estimated at 3 percent, Goldman said.
The impact may be even stronger if Chinese citizens turn out to have significant “pent-up” demand for travel after three years of borders being closed, the economists said.
Excluding Hong Kong and Singapore, the direct trade boost from China’s reopening will be small for most Asian economies, driving up their GDPs by between 0.2 percentage points and 0.4 percentage points, the economists estimated.
The rise in Chinese oil demand could lift global oil prices by US$15 per barrel, which would have a negative impact on some economies like Hong Kong and Singapore.
The economists said their analysis is based on only the direct effects of China’s reopening on trade and travel and does not take into account potential supply chain disruptions, like what happened in Shanghai and Zhengzhou previously, when workers get infected.