BEIJING (Reuters – China’s exports likely fell more than expected in December. However, as a main economic driver, China continues to lose steam. Imports also slowed down and concern over Omicron weighed on demand prospects, according to a Reuters poll.

According to the average forecast by 29 economists, December exports were projected to rise 20.0% compared to a year ago. This is still a robust, but moderately higher than the 22.0% growth in November.

The poll found that imports would have increased 26.3% compared to a year ago, as compared to 31.7% in November.

January 14th will see the release of data by customs.

China’s export boom exceeded expectations in much of 2021. It buoyed growth as many other sectors had been struggling. However, analysts anticipate that shipments will slow down eventually due to an increase in overseas demand and the high cost pressure on exporters.

China has had a small number of Omicron-related cases, as the country battles small outbreaks in various regions. It is adding uncertainty to its outlook.

Frederic Neumann (co-head Asian Economics Research at HSBC), stated that Omicron was able to pass through the defences even Hong Kong, mainland China and other countries, despite being protected by tough external quarantine.

Neumann said that Omicron can cause “hugely disruptive” supply chain problems in Asia if there are large numbers of sick workers and tough lockdowns.

Tianjin, a port city in China reported an increase of COVID-19-related infections Thursday. It was taking increased measures to stop an Omicron virus outbreak spreading to other Chinese cities.

China’s vice-commerce minister stated on December 30 that China will have unprecedented difficulties in stabilizing foreign trade in 2022 due to other exporters increasing production and a weaker base.

China managed an impressive recovery after the pandemic. However, there are indications that this recovery is slowing due to regulatory crackdowns in China and problems with the property industry’s debt.

According to a survey, factory activity increased at the fastest pace for six months in December. It was driven by price increases and decreasing pressures. But, there were also concerns about a weaker labor market and lack of confidence.

The central bank said that its policy of monetary flexibility will be maintained as it seeks stability and to reduce financing costs for companies amid economic headwinds.

Analysts at the International Institute for Micron Research (IIMR) stated that China will not gain as much export market share due to Omicron-related disruptions which hurt competitors. Morgan Stanley In a note

“Omicron may have made supply chains stronger and more resilient in Asian exporters.”