China’s economy has shrunk for the first time in decades as a result of the Coronavirus pandemic. The virus outbreak forced Chinese businesses and factories to remain closed. Official data has been released on Friday, which says that the second-largest economy has contracted 6.8%.
This financial loss due to the coronavirus outbreak on The Chinese economy will be a huge concern to other countries also. China is an economic powerhouse as it is the leading supplier of major goods and services.
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In the first quarter of this year, China has faced its economy shrinking for the first time since it started recorded quarterly figures in 1992. Yue Su at the Economist Intelligence Unit said, “The GDP contraction in January-March will translate into permanent income losses reflected in bankruptcies across small companies and job losses.”
Previous economic scenario
Last year at the same time, in the first three months, China has experienced healthy economic growth of 6.4%. At that time, China was facing a tight trade war with The United States. According to the reports, China has experienced an average economic growth of around 9% in the last two decades. But experts have continuously shown doubt on the accuracy of its economic data.
This year, in the first three months, China has faced a shrink in the economy as it enabled large-scale shutdowns and quarantines in order to prevent the spread of the deadly coronavirus. Economists expected bleak figures, but the official data is depicting something worse than expected. China slowly starts manufacturing, but factory output was down 1.1% for March.
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Many shoppers choose to stay home, and as a result, retail sales reduced 15.8% last month. Even unemployment has hit 5.9% in March, and it is slightly better than February.
This shrink directly indicates the power of a deadly virus. Improving the healthcare industry needs to be the utmost aim for a country now. Even the second-largest economy has faced a massive fall and experienced extended lockdown.
Beijing has indicated significant economic motivation as the government is working to stabilize its economy and recovery. During the starting of this week, the official mouthpiece of the ruling Communist Party, the people’s daily, said, it will “expand domestic demand”.
A major part of China’s economy depends on exports. But there are a lot of other major countries that are presently going through the total lockdown. If their situation does not improve, it will also be a challenge for China to enable quick recovery.
The International Monetary Fund forecast last Thursday that China’s economy is going to avoid the recession but will grow by1.2% this year. It has also been noticed that the official government unemployment figure has risen sharply, mainly in companies linked to exports.
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