China’s “zero-Covid” restrictions could weigh on world growth by prolonging supply chain disruptions and global inflationary pressures, a Bank of Japan policymaker said on Wednesday.
The remark follows a warning last month by International Monetary Fund head Kristalina Georgieva that China should reassess its zero-Covid approach to the pandemic given the emergence of the highly contagious Omicron variant.
“China’s economy is the world’s market and factory,” BOJ board member Toyoaki Nakamura said in a speech.
“There’s a risk its ‘zero-Covid’ policy amid widening Omicron infections could weigh on the global economy, as well as prolong global supply chain disruptions and inflationary pressures,” he said.
Uncertainty over how quickly Japanese companies pass on rising raw material costs to households is also among risks to the country’s economy, said Nakamura, a former executive at Japanese electronics giant Hitachi Ltd.
Nakamura said Japan’s economy is expected to recover as the impact of the pandemic and supply constraints subside.
But he said the BOJ will maintain its ultra-loose policy to ensure the economy strengthens enough to accelerate inflation to its 2% target.
- Reuters with additional editing by Sean O’Meara