Coronavirus lockdown has frozen production and spending. As a result, China’s economy, for the first time since 1992, shrank in Q1 2020. During the quarter, gross domestic product fell by 6.8 percent, the National Bureau of Statistics reported on Friday. The country hasn’t reported a full year of contraction since fifty years ago.
The weakness in consumer spending and investor confidence are reflected by the sharp contraction. The economic data showed that industrial production fell by 1.1 percent year-on-year, retail sales of consumer goods fell 19 percent, investment in fixed assets fell by 16.1 percent, and imports and exports were down by 6.4 percent – all worse than estimated.
China’s GDP decline was remarked by the American economist Nouriel Roubini as a “depression rate of economic collapse”. The beginning of Q2 showed positive economic growth for the country but the collapse in Q1 was staggering, Roubini said.
The director at the investment platform EQi said China’s drop in GDP is an extraordinary shock to the country’s economy and by implication the rest of the world. While it is still in the throes of the pandemic, Pearson suggested that China’s data was an important indicator in considering the impact for the West.
