China, once the epicentre of the COVID-19 pandemic, appears to be turning a corner with daily life slowly returning to normal.
However, economic data from the first two months of the year shows the damage done to the country’s finances.
Today’s visualisation outlines the sharp losses China’s economy has experienced, and how this may foreshadow what’s to come for countries currently in the early stages of the outbreak.
A Historic Slump
The results are in: China’s business activity slowed considerably as COVID-19 spread.
Investment in Fixed Assets Year-over-year Change (Jan-Feb 2020) was down 24.5 pert cent
Retail Sales, down 20.5 per cemt
# Value of Exports, down 15.9 per cent
# Industrial Production, down 13.5 per cent
# Services Production, down 13.0 per cent
*Excluding rural household investment
As factories and shops reopen, China seems to be over the initial supply side shock caused by the lockdown.
However, the country now faces a double-headed demand shock as domestic demand has been slow to gain traction due to psychological scars, bankruptcies, and job losses, while overseas demand is suffering as more countries face outbreaks.
With a fast recovery seeming highly unlikely, many economists expect China’s GDP to shrink in the first quarter of 2020 — the country’s first decline since 1976.
Danger on the Horizon
Are other countries destined to follow the same path? Based on preliminary economic data, it would appear so.
Much of the population is on stay at home orders killing retail and services activity and unemployment is heading for double digit figures.
Manufacturing activity is down with the CBA bank purchasing managers index slumping from 49.0 to 40.7, the steepest reduction since data collection began in 2016.
Light at the End of the Tunnel
Given the near-shutdown of many economies, the IMF is forecasting a global recession in 2020.
Separately, the UN estimates COVID-19 could cause up to a $2 trillion shortfall in global income.
On the bright side, some analysts are forecasting a recovery as early as the third quarter of 2020. A variety of factors, such as government stimulus, consumer confidence, and the number of COVID-19 cases, will play into this timeline.
Inforgraphic: Visual Capitalist
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