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IMF warns of risks from China’s falling Covid vaccination rates

(Bloomberg) — The International Monetary Fund has urged China to accelerate its coronavirus vaccination program, warning that the sharply slowing pace of new dose administration could undermine a recovery in consumer spending in the economy.

At the current pace, getting three doses of Covid vaccines to the population would take “a matter of years,” Helge Berger, head of the IMF’s China mission, said in an interview. With spending growth yet to recover to pre-pandemic levels, in part because households are cautious about Covid infections, “accelerating the vaccination campaign would boost confidence and ultimately consumption,” he said.

About 375 million people over the age of 15 in China have yet to receive three doses of a vaccine, while the daily vaccination rate has fallen below 800,000 a day, officials said. Studies have shown that three doses of China’s domestic coronavirus vaccines were almost as effective as mRNA vaccines in preventing serious infection or death.

The low rate of full vaccinations, especially among the elderly, is one of the reasons why China is sticking to its strict Covid-Zero policy, which mandates activity restrictions wherever virus cases occur. According to China’s National Health Commission, only about 64% of Chinese over 60 have received three doses.

Berger said lockdowns in Shanghai and dozens of other cities since March are a key reason the IMF sees “downside risks” to its April forecast of 4.4% gross domestic product growth for China this year.

“The second quarter will be weak given the lockdowns,” he said.

While national data has largely returned to pre-lockdown levels, Berger added that IMF-monitored economic measures in Shanghai have only recovered about 50%.

Read more: Even without a lockdown, Beijing’s economy struggled in May

Economists polled by Bloomberg are forecasting China’s GDP growth of 4.1% this year and a possible quarter-on-quarter decline in April-June. That makes it unlikely that the government will meet its annual target of around 5.5%.

The IMF has repeatedly asked Beijing to increase fiscal support for households. Even taking into account the measures announced since April, China’s fiscal stimulus is lower this year compared to 2020, Berger added.

“The known fiscal measures this year are still small compared to 2020, even considering that the overall shock in 2020 was larger than this year,” he said.

©2022 Bloomberg LP

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