The great fall of China’s economy: GDP set for historic plunge

The great fall of China’s economy: GDP set for historic plunge

The coronavirus that is now crushing demand for goods and services around the world first appeared in late December in China, and the country is getting set to announce what most analysts expect will be a historic contraction in economic activity.To get more Shanghai economy news, you can visit shine news official website.

After two months of a severe lockdown on people and businesses to curb the spread of the virus, economists fear that China's economy may have shrunk in the first quarter, the first time it has done so since records began. Beijing is due to announce the figures on Friday.

The world's second-largest economy, which already saw growth weaken to its slowest pace in almost 30 years in 2019, is expected to have shrunk by 6 percent in the first quarter of 2020, according to a consensus estimate of economists surveyed by data provider Refinitiv.

China has not recorded a three-month period of economic contraction since 1992 when it started publishing quarterly data on its gross domestic product (GDP), the sum value of all finished goods and services produced in a country.

The last time it recorded a full year of economic shrinkage was 1976, as the Cultural Revolution ended, according to World Bank data.

"Due to the protracted postponement of reopening of offices and factories in February, China's real GDP growth rate is estimated to contract sharply in [the first quarter of] 2020," Rajiv Biswas, Asia Pacific chief economist at IHS Markit told Al Jazeera. Real GDP growth figures take inflation into account.

Almost all the major economic indicators released over the last few weeks have pointed to a sharp slowdown in the first quarter, as China suffered the worst of the outbreak which began in the central city of Wuhan.

Data for January and February indicated that industrial production was badly disrupted, Biswas said, adding that the level of value added to goods and services - a measure of economic productivity - was weaker than the lowest reading during the 2008 financial crisis.

Exports also shrank in March, although the decline of 6.6 percent was slower than the 17.2 percent plunge over January and February.

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