Beijing: China, the world's second-largest economy, has decided to ease its travel rules, giving investors hope it could cushion the impact of higher interest rates on international stock markets and amid a gloomy outlook for 2023. Despite this, the supply chain can be opened.

Chinese officials announced late on Monday that visitors would no longer be subject to quarantine upon arrival from January 8. The announcement was the latest in a series of actions taken to reopen the nation, which is home to 1.4 billion people and vital global supply chains.

Despite the strain on China's healthcare system due to the surge in Covid cases, analysts at US investment bank Goldman Sachs believe the country's economy will overall benefit from the situation.

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Steps taken to facilitate domestic travel and internal travel within China support the investment bank's forecast of GDP growth above 5% in 2023, higher than predictions by some Wall Street rivals.

In a research note released on Tuesday, the bank said, "We view the new guidelines as a major step towards a full reopening, but caution on increased challenges to China's medical system in the near term." "

The airport in Shanghai, casinos in Macau, and Chinese airlines both domestic and international stand to benefit from the increase in travel that comes with the lifting of restrictions. Regional economies that play a key role in global supply chains, such as Thailand, stand to benefit from Chinese business travelers and tourists.

Data from Chinese travel website cTrip shows that within 30 minutes of news of the quarantines breaking on Monday night, searches for popular cross-border locations increased tenfold.

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The most recent relaxations follow indications from China's government in recent weeks that it will ease strict rules regarding testing, quarantining and travel. The lockdown has severely disrupted global supply chains, resulting in significant delays for goods such as cars and iPhones.

Earlier announcements from regimes about their intention to reopen have already improved the outlook for some of the world's top fund managers (BOFAs), according to a Bank of America survey.

From just 13% in November, expectations for faster growth in China have risen by nearly three-quarters. The percentage of people forecasting a recession in the world economy fell slightly to 69% from 73% in November.

According to BofA, "the reduction in recessionary expectations was probably due to an improved outlook on China's growth."

The pace at which restrictions are being lifted in China has accelerated as UK stock markets prepare to reopen from the Christmas holiday close on Wednesday.

Hopes of a year-end rally were dashed on Tuesday as US stock indices declined amid light holiday trading. The CSI 300 index, which includes the 300 largest companies listed in the two major Chinese financial centers of Shanghai and Shenzhen, rose 1.15% in China while the Shanghai Stock Exchange gained 1%.

After a difficult year for global financial markets at the end of 2022, any slight improvement in the investor outlook is likely to fizzle out.

Despite this, analysts at Capital Economics, a financial advisory firm, believe they can still be overly optimistic about the future of riskier assets such as developed economy stocks.

Investors seem to have changed their minds about inflation over the past few months, Thomas Matthews wrote in a note to clients, "meaning it will fall very quickly in the US next year and fall more slowly elsewhere.

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This indicates that they expect the US Federal Reserve and some other important central banks to scale back their plans to raise interest rates.

He continued, unlike us, investors believe this will be accomplished without too much of a slowdown in growth.

According to the US credit spread, a metric used to assess the risk associated with borrowing in the market, investors expect US businesses to perform admirably in 2019. Several corporate analyst reports in developed markets continue to suggest that some important economies may avoid recession.

According to investment banks such as Capital Economics and JPMorgan, the US will experience a recession in 2023 and 2024, but Goldman Sachs thinks the opposite.

In a note to clients on December 26, it said, "Our most consensus forecast for 2023 is that the US will avoid recession and instead continue to slide towards a soft landing."