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China’s monthly data revealed a very dark picture of the economy. The Coronavirus impact on the Q1 GDP could be close to -15% as the data points towards a much weaker recovery than was earlier expected, in the opinion of Tuuli Koivu from Nordea.

Key quotes

“The monthly data on the Chinese economy showed dramatic declines in all sectors. As a few examples, the annual drop was -14% in industrial production, -21% in retail sales and -25% in fixed asset investments for the first two months of this year.”

“We expect China’s GDP to contract 10-15% q/q and around 10% y/y in the Q1 2020.”

“Although the level of uncertainty is enormous and a quick turn to more positive development is possible, we can’t rule out a scenario where China’s annual GDP growth rate is close to 0% in 2020.”