Threat of widespread lockdowns high and rising

The next few weeks could be the worst in China since the early weeks of the pandemic both for the economy and the healthcare system. Efforts to contain the current outbreak will, at the very least, require additional localised lockdowns in many cities, which will further depress economic activity. And, while there is little prospect of the authorities opting to step back from the zero-COVID policy during the winter, there is a significant risk that containment efforts fail. In that case, restrictions would probably be imposed nationwide to flatten the curve of infections. This would have a bigger economic impact than any lockdown in China since the initial restrictions that were introduced in response to COVID’s emergence in Wuhan.