China suffered its worst economic contraction since at least the 1970s in the first quarter as it fought the coronavirus, and weak consumer spending and factory activity point to a longer, harder recovery than initially expected. The world’s second-largest economy shrank 6.8% from a year ago in the three months ending in March after factories, shops, and travel were closed to contain the infection, official data showed Friday. That was stronger than some forecasts that called for a contraction of up to 16% but was China’s worst performance since before market-style economic reforms started in 1979, the AP reports. Some forecasters earlier said China, which led the way into a global shutdown to fight the virus, might rebound as early as this month.
Activity started to improve in March after China's outbreak eased and the ruling Communist Party allowed factories to reopen, but analysts have been cutting growth forecasts as negative trade and other data pile up. “I don’t think we will see a real recovery until the fourth quarter or the end of the year,” said economist Zhu Zhenxin at the Rushi Finance Institute in Beijing. For the full year, forecasters including UBS, Nomura and Oxford Economics say China will have little to no growth. The ruling party has yet to announce this year's official growth target. It has been at least 6% in previous years. Asian stock markets rose following Friday's announcement, which was in line with investor expectations. At midday, Tokyo's benchmark Nikkei 225 index was up 2.6% and Hong Kong's Hang Seng was 2.2% higher.
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