China's Coronavirus-hit economy shrank by 6.8% in the first quarter: Government

The Chinese economy recorded contraction for the first time since the end of the Cultural Revolution in 1976

The Chinese economy has suffered a severe assault from the novel coronavirus pandemic, witnessing a contraction by a record 6.8 percent in the first quarter.

The world's second-largest economy that witnessed a steady expansion, since the end of the Cultural Revolution in 1976 and ascendancy of Deng Xiaoping in 1978, saw a sudden contraction in the first quarter of 2020.

Chinese economy contracts by 6.8%

China economy slump

According to the data released by the National Bureau of Statistics (NBS) of China, the economy contracted by 6.8 percent in the first quarter of 2020, South China Morning Post reported. The country's industrial sector, retail sales and fixed asset investment shrank in March following a huge contraction in Jan-Feb.

In March, industrial activity declined by 1.1 percent, following a contraction of 13.5 percent in the first two months. Retail expenditure, a key measurement of consumption saw a decline of 15.8 percent, following a contraction of 20.5 percent in Jan-Feb. Fixed asset investment, which fell by 20.5 percent in Jan-Feb, declined by 16.1 percent in the first three months.

Rate of unemployment, which reached a record high of 6.2 percent in February, reached 5.9 percent in the first quarter whereas annual income fell by 3.9 percent, with rural incomes reducing by 4.7 percent. According to data published earlier this week, China's exports had fallen by 6.6 percent and is expected to face the heat of the widespread lock-downs imposed throughout the world.

IMF's World Economic Outlook report

The International Monetary Fund (IMF) released its World Economic Outlook report, this week, in which it stated that the world economy is facing its worst crisis since the Great Depression of the 1930s. In 2020, it's expected to shrink by three percent, which is far worse than the 0.7 percent contraction witnessed during the 2008 financial crisis.

The Chinese economy, however, is expected to grow by 1.2 percent, much less than the six percent growth forecast in January. The decline in the growth of the Chinese economy will have a major implication on the world economy, due to its sheer size and the fact that it's the manufacturing power-house, featuring prominently in the global supply chain. The most populous country serves as a huge market for goods and services, which would take a hit due to the decline in average income.

Related topics : Coronavirus