China posts first GDP decline on record as coronavirus cripples economy
18 April, 2020
China’s economy shrank for the first time since at least 1992 in the first quarter, as the coronavirus outbreak paralyzed production and spending, raising pressure on authorities to accomplish more to stop mounting job losses.
Gross domestic product (GDP) fell 6.8% in January-March year-on-year, official data showed on Friday, bigger than the 6.5% decline forecast by analysts in a Reuters poll and reversing a 6% expansion in the fourth quarter of last year.
The contraction is also the first in the world’s second-largest economy since at least 1992 when official quarterly GDP records started.
While China has managed to get large elements of its economy up and running from a standstill in February, analysts say policymakers face an uphill battle to regenerate growth as the coronavirus pandemic ravages global demand.
Nomura expects Beijing to provide a stimulus package in the near-term, which could be financed by the central bank through various channels.
“However, unlike previous easing cycles, when the majority of the new credit visited finance shelling out for infrastructure, property and consumer durable goods, this time we expect most of the brand new credit to be utilized on financial relief to greatly help enterprises, banks and households survive the COVID-19 crisis,” they said in a note.
On a quarter-on-quarter basis, GDP fell 9.8% in the first 90 days of the year, the National Bureau of Statistics said, just off expectations for a 9.9% contraction, and weighed against 1.5% growth in the last quarter.
Separate data showed China’s commercial output falling by a less-than-expected 1.1% in March from a year earlier. Retail sales fell 15.8% in the same period. Fixed asset investment shrank 16.1% in January-March.
China’s urban jobless rate was at 5.9% in March, down from 6.2% in February.
The pandemic has infected a lot more than 2 million globally and killed a lot more than 130,000. China, where in fact the virus first emerged, has reported more than 3,000 deaths although new infections have dropped drastically from their peak.
Analysts expect nearly 30 million job losses this season due to stuttering work resumptions and plunging global demand, outpacing the 20-plus million layoffs through the 2008-09 financial crisis.
Beijing has pledged to take more steps to combat the impact of the pandemic, as mounting job losses threaten social stability.
The central bank has already loosened monetary policy to help release the flow of credit to the economy, but its easing up to now has been more measured than through the global financial crisis.
The government will also lean on fiscal stimulus to spur infrastructure investment and consumption, that could push the 2020 budget deficit to an archive high.
For 2020, China’s economical growth is defined to stumble to its slowest gross annual pace in nearly half of a century, a Reuters poll showed this week.Speech
Source: the-japan-news.com
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