China Could See First GDP Decline In Decades: Poll

The coronavirus health crisis likely knocked the mainland’s economy into its first decline since at least 1992 in the first quarter, raising the heat on authorities to do more to restore growth as mounting job losses threaten social stability.

The outbreak, which first emerged in Hubei province late last year, ground activity in the world's second-largest economy to a halt as drastic curbs on people movement shut down factories, transport and shopping malls.

While those restrictions are gradually being lifted, similar lockdowns now in effect in other major economies hit by the pandemic have significantly darkened the outlook for global demand, which would hurt the mainland’s massive export sector.

Analysts expect the gross domestic product to have shrunk 6.5% in January-March from a year earlier, according to a Reuters poll. That would reverse a 6% expansion in the fourth quarter of 2019 and mark the first decline since at least 1992 when official quarterly gross domestic product (GDP) records started.

"It's difficult to see a quick recovery in China's economy given the impact from the global pandemic," said Wang Jun, Beijing-based chief economist at Zhongyuan Bank.

"Economic growth will also depend on the strength of stimulus policies. Fiscal policy will play a leading role while monetary policy will be modestly expansionary."

Forecasts by 57 analysts polled ranged from a 28.9% GDP contraction to a 4% expansion for the first quarter.

On a quarterly basis, GDP is expected to have fallen 9.9% in January-March, compared with 1.5% growth in the previous quarter.

For 2020, the mainland’s economic growth is expected to slow sharply to 2.5% from 6.1% last year, a separate Reuters poll showed, which would be the weakest clip since 1976, the final year of the decade-long Cultural Revolution that wrecked the economy.

Beijing is to release the first-quarter GDP data on Friday, along with March factory output, retail sales and fixed-asset investment. (Reuters)