China’s Q1 GDP To Get Affected By Coronavirus
The deadly coronavirus is likely to cause a drastic drop in China’s first quarter economic growth, as the spread cannot be controlled. The GDP growth rate is expected to dip below 5 percent in the first quarter of 2020. The country’s economic growth rate is likely to weaken for the year.
The coronavirus outbreak during the Chinese New Year holiday season meant the holiday was prolonged. The virus’ impact initially concentrated in a few areas began to spread like wild fire, thus affecting tourism, transportation, education aviation, shipbuilding and other industries especially electronics.
Now most Chinese are worried that domestic consumption will be undermined. Consumers are already finding that there are shortages in agricultural products including meat and prices are rising.
The domestic e-commerce and delivery service industry is already suffer limited impact. Cross-border e-commerce may be dealt a blow with reduced numbers of orders.
In this unprecedented situation, it will become difficult to maintain strong exports and a robust manufacturing industry. Entrepreneurs and employees confidence has been shaken as they can no longer map out their own paths. This also stems from China’s governance methods.
In the second half of 2020, China’s epidemic-hit economy is expected to relapse further with a doubtful recovery in the third and fourth quarters.
Even when the coronavirus is vanquished, China will find it very difficult to continue to implement schemes such as the Belt and Road Initiative, free trade zones and free trade ports. Any drop in these these initiatives will further shaken the shareholder confidence, investor expectations for Chinese economic stability and China’s business environment. China will have to ensure investment projects which involve firms like Tesla and ExxonMobil. Those projects will build China’s global image and boost own confidence.
The epidemic has revealed deficiencies in contingency measures to counter emergencies in some areas. However, China gave full play to its governance capabilities and institutional advantages when the entire country was mobilized.
This is something that only few other countries like India, Russia and USA can achieve..Still the Chinese economy’s momentum will take time to comeback and is likely to take 2 to 3 years to recover.
