Tomorrow, April 17, at 10 a.m. Beijing time, the Chinese government will release first-quarter GDP figures and year-to-date investment, as well as retail sales, industrial output, and unemployment numbers for March. There is no question the numbers will be bad, almost certainly reflecting the weakest growth since the end of the Cultural Revolution (1966–76).
Is an 11% contraction possible? That number would not be “unreasonable,” according to consultancy the China Beige Book, per CNBC, although Beijing may massage the numbers significantly. But whatever the official number is, how should you read tomorrow’s data?
Bloomberg suggests (porous paywall) five key themes that will likely indicate a limited or nonexistent rebound:
- Rising unemployment
- Plunging investment
- Low consumer demand
- Slumping exports
- Disinflation or deflation
The Financial Times also gives five questions to ask (paywall):
- How big will the first-quarter decline be?
- Is there any hope of avoiding another decline in the second quarter?
- Can the Chinese government rein in rising unemployment?
- Will Beijing have to target more of its relief measures at individuals and households, rather than companies?
- Is a bigger stimulus coming?
Of course, no country will escape this. Earlier this month, the International Monetary Fund predicted that as a result of the COVID-19 pandemic, “the global economy is projected to contract sharply by -3 percent in 2020, much worse than during the 2008-09 financial crisis.” It could be much worse: “The risks for even more severe outcomes, however, are substantial.”