The contraction in the first quarter would also be the first decline since at least 1992, when official quarterly GDP records started, according to Reuters.
Analysts polled by Reuters predicted that China’s GDP would drop 6.5% in the quarter from January to March, compared with a year ago. Forecasts of 57 analysts surveyed ranged from a 28.9% contraction to a 4% expansion. The Chinese economy grew 6% in the previous quarter, from September to December 2019.
China’s first quarter GDP fell 9.8% from the fourth quarter of 2019, according to office data. In the first quarter, retail sales in China fell 19% from a year ago, while industrial production fell 8.4% over the same period, he said.
The country is facing enormous pressure amid growing uncertainty and instability linked to the coronavirus epidemic, said the bureau of statistics. The country is also facing new difficulties and challenges in resuming work and production.
While the overall GDP figure was not unexpected, the rest of the data did not bode well for the months to come, said Bo Zhuang, chief economist of China at TS Lombard.
“What is really important is that before March, everyone expected China to experience a V-shaped recovery, because it was actually (by the way) a break in supply in China, but now we are seeing this demand shock, “Zhuang told CNBC. “The shock of internal demand has been enormous. This tells us that after the coronavirus, even after lifting the locks, people are careful to consume. Shopping centers are open but they don’t consume, and that’s the key. “
Industrial production fell 1.1% year-on-year in March, but it was a “false dawn” with the lifting of blockages, which made it possible to delay the execution of certain orders from February, said Zhuang. A Reuters poll predicted a 7.3% drop in industrial production in March compared to a year ago.
The second largest economy in the world stopped earlier this year as Beijing put in place large-scale stops and quarantines to limit human contact to contain the coronavirus epidemic.
The Chinese economy is starting to work online again, with the restart of work in many companies, but it is facing headwinds. As demand from the rest of the world’s reservoirs is due to the global spread of the virus from mid-March, China’s industrial production and exports could worsen in April or May, said Zhuang.
The latest data comes after exports fell sharply in January and February compared to a year ago, and manufacturing activity fell.
A separate Reuters poll has shown that China’s GDP growth is expected to slow sharply to 2.5% in 2020 from 6.1% in 2019.
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