The Chinese economy has contracted by 6.8 per cent in the first quarter of 2020, the first quarterly decline since 1992, announced the National Bureau of Statistics of China.
Reuters’ pool of 57 analysts expect a contraction of 6.5 per cent, but despite the drop in GDP, the bureau said the economy is reopening at a faster pace. Malls are already open in Wuhan as its 76-day lockdown was lifted on April 8.
“The resumption of work and production accelerated, with fundamental industries and major products vital to national economy and people’s livelihood growing steadily,” according to its statement on Friday.
China’s retail sales and industrial production dropped by 19 and 8.4 per cent respectively in the first quarter. Its total value of imports and exports of goods was down by 6.4 per cent year-on-year, as exports dropped by 11.4 per cent to 3,336 billion yuan. Imports were also down by 0.7 per cent to 3,238 billion yuan. The trade balance was 98.3 billion yuan (US$13.89 billion) in surplus.
S&P Global Ratings said on Friday that the coronavirus pandemic will cost Asia-Pacific at least US$2 trillion in lost household and corporate incomes through 2021, about 3 per cent of the region’s GDP.
“As the COVID-19 pandemic endures, we are learning more about its human, economic, and financial costs,” said Shaun Roache, chief economist of Asia-Pacific at S&P Global Ratings. “The next lesson will be about the cost of transition between lockdown and vaccine.”
The rating company now expect economies to enter a transition period between full lockdowns and business-as-usual until mid-2021.
Economic policies can limit some of the damage during first-wave containment and support partial recovery during the transition period towards full recovery in late 2021. However, the costs continue to compound, they added.
S&P now expects Asia-Pacific’s economy to expand by 0.3 per cent in 2020 from 4.8 per cent before the pandemic. China is expected to grow by 1.2 per cent from 2.9 per cent. India is expected to expand by 1.8 per cent from 3.5 per cent, and Japan is expected to contract by 3.6 per cent from the previous prediction of 1.2 per cent contraction.
“From an economics perspective, the main risk now is unemployment,” Roache noted. “Jobs are easily lost but hard to win back and a surge in unemployment, say by more than 4 percentage points across the region, would mean a much flatter recovery path.”
