6.8% contraction: China’s economy in worst downturn since ’70s as virus hits hard

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Vendors stand in a near-empty Huawei store in Guangzhou, Guangdong province, China, 16 April 2020 (issued 17 April 2020). China’s gross domestic product (GDP) contracted 6.8 percent in the first three months of the year, according to a report of the National Bureau of Statistics issued on 17 April 2020. This is the first such drop in GDP reported by Chinese authorities since they began publishing such information in 1992. EPA/ALEX PLAVEVSKI.

The  Korea Times – China suffered its worst economic contraction since at least the 1970s in the first quarter as it fought the coronavirus, and weak consumer spending and factory activity point to a longer, harder recovery than initially expected.

The world’s second-largest economy shrank 6.8% from a year ago in the three months ending in March after factories, shops and travel were closed to contain the infection, official data showed Friday.

That was stronger than some forecasts that called for a contraction of up to 16% but China’s worst performance since before market-style economic reforms started in 1979.

Some forecasters earlier said China, which led the way into a global shutdown to fight the virus, might rebound as early as this month. Activity started to improve in March after China’s outbreak eased and the ruling Communist Party allowed factories to reopen, but analysts have been cutting growth forecasts as negative trade and other data pile up.

”I don’t think we will see a real recovery until the fourth quarter or the end of the year,” said economist Zhu Zhenxin at the Rushi Finance Institute in Beijing.

Asian stock markets rose following the announcement, which was in line with investor expectations. At midday, Tokyo’s benchmark Nikkei 225 index was up 2.6% and Hong Kong’s Hang Seng was 2.2% higher.

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