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Not surprisingly, the Chinese economy took a hard hit from the containment measures that led to a month-long standstill in February, Amy Yuan Zhuang, an analyst at Nordea, reports.

Key quotes

“The GDP growth in Q1 was an unprecedented low of -6.8% y/y (-9.8% q/q), more negative than market consensus (-6.5% y/y) and less so compared to our forecast (-10% y/y). It’s the first contraction of economic activities since data began in 1992.”

“The CNY and CNH have not seen large movements on the back of the release, and Chinese equities are in the positive territory.” 

“The PBoC has hesitated to cut the benchmark one-year rate but it is too early to write off a rate cut just yet given the high uncertainty surrounded the COVID-19 development and the longer time it takes to recover in China.”