China’s economy contracted for the first time at least since 1992 as activity came to a standstill after Beijing adopted strict shutdowns and quarantines to contain the spread of the coronavirus, or covid-19.
Gross domestic product contracted 6.8 percent on a yearly basis in the first quarter, data from the National Bureau of Statistics showed on Friday.
This was bigger than the expected fall of 6 percent and marked the first decline since the nation began reporting quarterly data in 1992. The economy had expanded 6 percent in the fourth quarter of 2019.
On a quarterly basis, GDP was down 9.8 percent, in line with expectations.
Due to shutdowns, industrial output declined 8.4 percent from last year in the first quarter, but slower than economists’ forecast of -10 percent.
Retail sales plunged 19.0 percent in the first quarter, which was faster than the forecast of 12.5 percent decrease.
In the first quarter, fixed asset investment plunged 16.1 percent compared to a decline of 24.5 percent in January to February period. Economists had forecast an annual fall of 15 percent.
In March, industrial production decreased 1.1 percent year-on-year and retail sales were down 15.8 percent. The surveyed jobless rate was 5.9 percent in March, but down from 6.2 percent in February.
The International Monetary Fund, early this week, said China, where the Covid-19 pandemic started, is forecast to grow a moderate 1.2 percent this year, but rebound with a growth surge of 9.2 percent next year.
Terrible GDP contraction in the first quarter means a fat U recovery, Iris Pang, an ING economist said. As long as strict social distancing measures are in place, China will have difficulty achieving a fast recovery, the economist noted.
The economist said monetary easing and fiscal stimulus will certainly continue.
Julian Evans-Pritchard, an economist at Capital Economics, said he suspects that the slump in national output was even deeper than officials claim. The monthly data suggest that activity improved in March but remained weak even as efforts to contain COVID-19 were relaxed.
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