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SÃO PAULO – The Chinese economy fell 6.8% in the first quarter of 2020, strongly impacted by the outbreak of the new coronavirus.
The result was worse than estimates by analysts surveyed by Bloomberg, who were forecasting a 6% decline in activity in the world’s second-largest economy earlier this year. However, other projections pointed to different data: Reuters had estimated a fall of 6.5%, while the Wall Street Journal expected a fall of 6.8%.
This was China’s first quarterly contraction since 1992, when local government data began to be released. In the fourth quarter of last year, the Chinese economy registered growth of 6%.
Much of China’s economic activity stopped in January, when the coronavirus outbreak gained momentum in the country. Large-scale quarantines have been implemented, paralyzing most of the production in the world’s second-largest economy.
In the first quarter, retail sales in China fell 19% during the same period last year, while industrial production fell 8.4% in the same period, the data showed.
Between January and February, exports fell sharply in relation to the previous year, with a large retraction in manufacturing activity.
In late March, the Chinese government began to resume activities in the country, and work resumed in many companies.
Market reaction
Despite the sharp drop, the number does not appear to have had a major impact on the market, mainly because the projections were quite scattered, and some analyzes expect even worse GDP.
US futures indices followed the upward movement recorded since the opening of business tonight, with gains of around 3.5%, driven by the publication of a report indicating that one of the drugs manufactured by Gilead Sciences has shown promising results in treating patients diagnosed with Covid-19.
Additionally, early in the evening, President Donald Trump announced a plan to reopen / resume American economic activities.
On the Asian exchanges, the movement also has expressive gains, with Nikkei, Asia Dow and Hang Seng advancing more than 2%. Meanwhile, the Shanghai index rose less, at around 0.8%.
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