China has reported that its economy shrank by 6.8% in the first quarter of 2020, compared to the same period in 2019. This marks the country’s first contraction since it started recording quarterly figures in 1992. In the previous two decades, China has recorded an average economic growth of around 9% per year, although the accuracy of this data is regularly questioned.
To address the rapidly spreading coronavirus (COVID-19), China shut down large parts of its economy and enforced mass quarantines in January 2020. Beijing has since announced roughly $184 billion in fiscal measures to counteract its downturn. By March 2020, China’s unemployment rate had improved to 5.9% from 6.2% the previous month. In the same fiscal report, however, factory output had fallen 1.1% and retail sales dropped 15.8%. Chinese state media reports that the government plans to further cut interest rates hoping to boost domestic demand, however, China’s recovery will likely depend on demand from abroad. Most other economies were affected by the pandemic weeks or even months after China, and some, like the United States, have not yet reached peak infection numbers.
