LONDON – Worse-than-expected economic figures in November might have been a bigger driver behind the relaxation of China’s strict “zero dynamic” COVID-19 rules than the public protests were.

On Thursday, China reported November economic data that missed expectations across the board.

Retail sales were down 5.9% last month year-over-year, the National Bureau of Statistics revealed. The figure was worse than the 3.7% decrease projected by Reuters, and a major decline compared to the 0.5% year-over-year drop in October.

Industrial production grew by 2.2% in November year-on-year, missing Reuters’ forecast of a 3.6% increase. Fixed asset investment for the year through November slowed to 5.3% from a year ago. Reuters had anticipated a 5.6% increase in the period.

It was the slowest growth since May, when Shanghai was put under a two-month-long lockdown. The November decline was due partly to disruptions in key manufacturing hubs like Guangzhou and Zhengzhou, where violent clashes between workers and the police took place.

Fu Jiaqi, statistician at the department of trade and foreign economic affairs at China’s National Bureau of Statistics, said that while the consumer market was significantly under pressure in November from the pandemic, online consumption grew steadily.

From January to November, the national online retail sales of physical goods increased by 6.4% year-on-year, growing faster than offline sales. They accounted for 27.1% of the total retail sales of consumer goods, Fu said.

On the bright side, Alicia Garcia-Herrero, chief economist of Asia-Pacific at wealth management firm Natixis, believes the worst will be over by end of the first quarter, and GDP growth in China will be able to reach at least 5.5% in 2023.

The International Monetary Fund projects that China’s GDP will grow 3.2% this year, with 4.4% growth forecast for 2023.

“The key here is to know whether the wave of infections could have some hard impact on supply, and that’s the key for the rest of the world. Inflation is going to increase because of supply chain disruptions. Not because of the lockdowns, but because of the absent [workforce] and the massive contagion that we’re seeing now in COVID cases in China. That’s the risk,” Garcia-Herrero said in an TV interview with Bloomberg.

Japanese investment bank Nomura also warned that the “rapid surge of infections in big cities might be only the beginning of a massive wave of COVID infections” and “the incoming migration around the Chinese New Year holiday in late January could bring about an unprecedented spread of COVID and severe disruptions to the economy.”

Since the beginning of December, China has scrapped most of its strict COVID-19 rules on mass testings, the track and trace system, and quarantines, after unprecedented anti-lockdown protests broke out in major cities like Beijing, Shanghai, and Guangzhou at the end of November.