The coronavirus is expected to push China’s first-quarter economy into the first contraction in more than three decades, according to analysts in a Reuters poll. According to the survey, China’s GDP has shrunk by 6.5% year-on-year in the January-March period and, marking the first quarterly decline since 1992 and compared to a 6% expansion in the previous quarter.
For 2020, the growth of the world’s second-largest economy is projected to slow sharply to 2.5% from 6.1% in the previous year, a separate Reuters poll predicted. If materialized, this would mark the weakest performance since 1976, when the decade-long Cultural Revolution ended.
According to the poll, China’s industrial production is forecast to decline 7.3% year-on-year in March, easing from a 13.5% drop in January-February, while retail sales are likely to drop by 10%, compared to a 20.5% fall in the first two months of 2020. Fixed-asset investment is expected to decrease by 15.1% year-on-year in the first quarter, moderating from a 24.5% drop in January-February.
Meanwhile, the International Monetary Fund, in its updated 2020 World Economic Outlook, forecasts that China’s economic growth will slow to 1.2% this year. The economy will then rebound strongly by 9.2% this year. With such expected growth, Beijing is expected to step up policy measures to support the economy further.
The IMF dubbed the current downturn as “The Great Lockdown” which is expected to be the worst economic downturn since the Great Depression in the 1930s. The outcome of the Great Lockdown is expected to be a 3.0% contraction in the world’s economy in 2020, far worse than the 0.1% contraction as a result of the global financial crisis in 2008-2009.
