China’s economy is going through its worst three-month period in decades and will record its first-ever GDP loss — 6.8 percent in the first quarter of 2020 compared to 2019, according to a statement from the National Bureau of Statistics of China.
Analysts polled by Reuters anticipated a GDP decline of 6.5 percent. The 57 analysts polled had forecasts ranging from a 28.9 percent GDP contraction to a 4 percent expansion for the first quarter.
“It’s difficult to see a quick recovery in China’s economy given the impact from the global pandemic,” Wang Jun, Beijing-based chief economist at Zhongyuan Bank, told Reuters. “Economic growth will also depend on the strength of stimulus policies. Fiscal policy will play a leading role while monetary policy will be modestly expansionary.”
China’s economy grew 6 percent in the fourth quarter of 2019. The last time China experienced a contraction in its economy was in 1976 when Communist Party leader Mao Zedong died — and that was before official records started being recorded in 1992.
“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.”
COVID-19 first emerged in the Chinese city of Wuhan at the end of December, and by late January a two-month lockdown ensued, suspending all but the most essential businesses.
Mao Shengyong, a spokesperson for the National Bureau of Statistics of China, told a press briefing after the data was released that the second quarter is anticipated to be “much better” than the first quarter.
In January and February, the Index of Services Production dropped by 13.0 percent year on year, and total retail sales of consumer goods dropped to 5,213 billion yuan, a year-on-year decline of 20.5 percent.