China suffered an even deeper slump than analysts feared at the start of the year as the coronavirus shuttered factories, shops and restaurants across the nation, underscoring the fallout now facing the global economy as the virus spreads around the world. Industrial output plunged 13.5% in January and February from a year earlier, retail sales fell 20.5%, and fixed-asset investment dropped 24.5%. The unemployment rate jumped to a record 6.2% in February, when the outbreak worsened and much of the economy was shutdown.
The outbreak of deadly viral pneumonia in Wuhan dramatically worsened in January, prompting China to lockdown Hubei province, extend holidays and restrict travel and business across the country. That brought much of the nation’s economic activity to a halt in February, undercutting a stabilization seen in December. Gross domestic product is now all but certain to contract in the first quarter compared to the same period last year — the first time that has happened since comparable data begins in 1989. “Covid-19 made the economy stop, from factories to spending,” said Iris Pang, ING Bank NV in Hong Kong. “As the coronavirus spread to almost everywhere, global demand and global supply chains will take a hit and will feedback to China’s manufacturers and exporters in March and April.”
Even as governments in China and some other Asian nations look to be getting their outbreaks under control, the coronavirus is now spreading rapidly in Europe, the U.S. and other parts of the world. That will likely hit demand for Chinese exports, lengthening the damage to firms and the economy.
“China’s containment of the epidemic is bearing fruit, but there is a challenge ahead in controlling the spread in other countries,” National Bureau of Statistics Spokesman Mao Shengyong said in Beijing after the data was released. “Growth of the global economy and trade may slow to some extent, which will exert some impact on China’s economic growth.”