SHANGHAI — The coronavirus dealt the world’s second largest economy a record blow, with key data on factory output and retail sales showing sharp plunges, following a viral outbreak and aggressive containment measures that kept much of the country’s population away from work for prolonged periods.
Retail sales plunged 20.5 percent during January and February over the same period in 2019, while industrial output was down 13.5 percent, and fixed asset investment — a measure of expenditure on items including infrastructure, property, machinery and equipment — fell by nearly 25 percent, according to the National Bureau of Statistics.
That was the weakest reading since January 1990 when Reuters records started, and a sharp reversal of the 6.9 percent growth seen in December.
According to the South China Morning Post, a spokesman for the National Bureau of Statistics, Mao Shengyong, said while the virus was responsible for the historic slump, “the impact of the virus is short-term and manageable.”
“Only this time next month will we know what first-quarter gross domestic product looks like,” Mao said. “It will mainly depend on March’s performance, since this month accounts for about 40 percent of quarterly economy in the first quarter, and January and February combined account for 60 percent.”
March’s figures could look even worse — as for most of January, China was running business as usual and the data for the two months taken together could soften the impact. The Chinese government only moved to lock down areas in the last few days of the first month.
China is slowly getting back on its feet, while other major economies like the U.S. and Italy are now feeling the virus’ heat. The country has allowed businesses to resume operations although not many are at full capacity and firms are subject to tight precautions to prevent another outbreak.
“There is nothing in the history of this data to compare to this set of abysmal figures,” said Iris Pang, Greater China chief economist for ING.
“Retail sales have recovered only very slowly as consumers are still wary about going into shopping malls and restaurants,” Pang said. “This could continue as there are some imported COVID-19 cases in major cities.
“Industrial production will continue to be hit in March and April as the spread of COVID-19 in almost all countries means global demand will stop abruptly, and global supply chains will still be broken as factories around the world suspend operations. We are not optimistic about China’s manufacturing and exports.”
The day before, ING revised their GDP forecast for the country, predicting that first quarter GDP will grow by 3.6 percent, down from the 4.4 percent the bank had published in early March. ING’s full year 2020 China GDP growth forecast has been reduced to 4.8 percent from 5.2 percent. GDP growth in 2019 was 6.1 percent, according to official data, with the government’s grand goal to double the size of its economy in 2020 from 2010.