China’s gross domestic product contracted by 6.8% from a year ago in the first quarter. Economists had projected a 6.0% drop. The decline was the worst since the government began releasing quarterly GDP numbers in 1992.
Other numbers in today’s data dump were equally grim. Retail sales fell 15.8%. Investment in fixed assets was down 16.1% for the first three months of the year compared with last year. Industrial production was the brightest spot. Industrial production slipped only 1.1% in March compared to March 2019 as many factories returned to work.
Improving growth from here is likely to be a difficult task. While much of China’s domestic economy is re-opening–about 90% of China’s businesses have resumed activity, Bloomberg estimates–the global economy is still reeling and that means fewer orders from overseas customers for China’s exporters.
So far China’s government has held off on the kind of large scale stimulus employed to restore economic growth after the global financial crisis. But markets are beginning to anticipate an end to that restraint. Today, on this bad news, the Shanghai Composite was up 0.66%. The index is now up 2.12% in the last month although it is still down 13.01% over the last year.
