The Chinese government will today release the nation’s GDP growth figures for the first three months of 2020. Amid the
The Chinese government will today release the nation’s GDP growth figures for the first three months of 2020.
Amid the ongoing COVID-19 pandemic, the outlook for China is not healthy. Economists predict that the economy shrank in the first quarter by 6.5%, the country’s first contraction in more than four decades. According to a survey of economists, internal travel restrictions and the shutdown of factories and shops will leave total economic growth for 2020 around 2.5%, the lowest since the end of the Cultural Revolution in 1976.
Because of the global drop in demand and hesitant consumer spending, China’s export-oriented economy will not quickly recover even as the country emerges from its state-imposed quarantine. Unlike other large economies, China has thus far avoided a massive fiscal stimulus, preferring instead to relax monetary policy and cut taxes. However, with the release of the catastrophic GDP numbers, this will most likely change.
Beijing is likely to support local infrastructure projects in 5G and transport to spur domestic consumption. This spending is anticipated to be in the trillions of yuans, on par with the 2008-2009 recession stimulus. But this is unlikely to compensate for the halt of global trade. China’s recovery will depend heavily on the revival of international economic fortunes.
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