The consumer spending of China, as well as other economic activities, fell badly even than expected in the first two months of 2020 due to coronavirus outbreak. It adds more difficulties for the ruling Communist Party as it is struggling to revive the second-largest economy of the world. According to the statistics from the government shared on Monday, as compared to the previous year, retail sales drop about 20.5% after shopping malls, and other industries closed in late January.
Factory production fell by a record 13.5% after the extension of the Lunar New Year holidays to keep producers and offices closed. The statistics are even duller than the expectations of economists. They warned manufacturers and other businesses would struggle instead of the official efforts to revive factories and other businesses in several areas while avoiding a new spike in infected cases.
Iris Pang, the economist of ING, wrote in a report that it is not the end of the nightmare. Let’s Watch out! The ruling party reduced some controls and allowed all types of businesses to reopen in several regions. However, corporations, as well as economists, say it will be months before everyday activity returns to normal levels. They say that the economy might be pushed back more because the U.S. and the European governments are implementing travel and other curbs that will further reduce demand for Chinese exports.
Report of Julian Evans-Pritchard of Capital Economics
Julian Evans-Pritchard said in a report that the recent statistics highlighted even more contraction this quarter. The March figures are even possibly worsening than January and February. The period of the first two months seems to give an even better look because it includes the January start before anti-virus controls hit.
Evans-Pritchard said going forward, the pace of recovery possibly remains slow. The worldwide spread of coronavirus will hold back the revive in exports, even as businesses return to normal operations. The National Bureau of Statistics reported that private business investment fell 26.4% while commercial real estate sales tumbled 39.9%.