Hobbled by coronavirus, China’s Q1 GDP shrinks for first time
China’s economy contracted for the first time on record in the first quarter as the coronavirus shut down factories and shopping malls and put millions out of work.
Gross domestic product fell 6.8 per cent in January-march yearon-year, official data showed Friday, a slightly larger decline than the 6.5 per cent forecast by analysts and reversing a six-per-cent expansion in the fourth quarter of 2019.
It was the first contraction in the world’s second-largest economy since at least 1992, when official quarterly GDP records were first published.
Providing a silver lining was a much smaller-than-expected fall in factory production in March, suggesting tax and credit relief for virus-hit firms was helping restart parts of the economy shut down since February.
However, analysts say Beijing faces an uphill battle to revive growth and stop massive job losses as the global spread of the virus devastates demand from major trading partners and as local consumption slumps.
“First-quarter GDP data is still largely within expectations, reflecting the toll from the economic standstill when the whole society was on lockdown,” said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank.
“Over the next phase, the lack of overall demand is of concern. Domestic demand has not fully recovered as consumption related to social gatherings is still banned while external demand is likely to be hammered as pandemic spreads.”
On a quarter-on-quarter basis, GDP fell 9.8 per cent in the first three months of the year, the National Bureau of Statistics said, just off expectations for a 9.9-per-cent contraction, and compared with 1.5-per-cent growth in the previous quarter.
Statistics bureau spokesman Mao Shengyong said China’s economic performance in the second quarter is expected to be much better than in the first.
However, weaker domestic consumption, which has been the biggest growth driver, remains a concern, as incomes slow and the rest of the world falls into recession.