• China’s economic activity slowed dramatically in early 2020, as measures designed to control the spread of Covid-19 have negatively impacted industrial production, construction and services. Available data appears to suggest that these measures have been successful in slowing the spread, and authorities are now attempting to unwind the constraints and restart activity. That said, it may be some time before China returns to normal activity levels – given the likely slower recovery in confidence and the weaker global economic environment due to the virus spread.
• Reflecting the scale of the downturn in the first two months, we expect an unprecedented decline in China’s GDP in Q1 – down by 12% yoy (far weaker than any quarter stretching back to the early 1990s). Given the relatively slow recovery in activity measures for March, we expect the rebound in China’s economy will be spread across Q2 and Q3. For the full year, we now forecast no growth (compared with our previous forecast of 4.8%).

For further details, please download the full report:  China economic update 27 March 2020