Coronavirus: unprecedented contraction of China's GDP, down 6.8% in the 1st quarter

Text by: RFI Follow

China's economy contracted in the first quarter for the first time since at least 1992, as the coronavirus epidemic paralyzed production and consumption, putting further pressure on Beijing to take further action to counter the effects of the health crisis.

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China's gross domestic product fell 6.8% year-on-year over the January-March period, official data released on Friday showed. A decline above the expected figure of -6.5% after growth of 6% in the fourth quarter of 2019.

This is the first contraction in Chinese GDP since at least 1992, when the official growth statistics were introduced. And according to AFP, in annual terms, China has not experienced a contraction in its GDP since 1976.

While China has managed to reopen much of the economy after its paralysis in February , analysts say policymakers in Beijing have a huge challenge ahead of them to reinvigorate economic growth as the coronavirus epidemic weighs heavily on world demand.

And all the more so since the Chinese continue to limit their movements and therefore their consumption, despite an improvement in sanitary conditions in recent weeks, for fear of catching the virus.

30 million job losses expected

According to data released separately on Friday, Chinese industrial production declined more than expected in March on an annual basis, to -1.1%, while retail sales fell 15.8% over the same period.

Julien Marcilly, chief economist of Coface, on the decline in Chinese growth

Agnieszka Kumor

Analysts expect the health crisis to cause more than 30 million job losses this year in China, where the coronavirus has killed more than 3,000 people, according to official figures. Beijing has promised to increase budget spending to limit the economic effects of the epidemic, while unemployment threatens social stability .

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