Industrial production in China posts a 30-year low in January-February amidst the Coronavirus emergency

The first two months of 2020 didn’t bring good news for industrial production in China that slumped at the fastest rate in three decades as the Coronavirus emergency continues to wreak havoc on business operations and threaten the second-largest economy of the world.

Retail sales and urban investment were also reported to have steeply declined for the first time since record-keeping began. Monday’s data reinforced the forecast that China’s economic growth may have been reduced by 50% in 2020’s first quarter. In such an event, authorities will have to take an aggressive stance to bring the economy back on track.

China’s National Statistics Bureau Reveals A 13.5% Decline In Industrial Production

The National Bureau of Statistics of China revealed a massive 13.5% decline in industrial production in January-February as compared to the same period last year. Economists had estimated a much lower 3.0% decline in the first two months of the year. Data for December, on the contrary, had recorded a 6.9% growth. Monday’s reading for industrial production in China came out the worst since 1990 when Reuters started record-keeping.

Chief Economist Zhang Yi of Zhonghai Shengrong Capital Management commented on Monday's data and stated:

“Judging by the data, the shock to China’s economic activity from the Coronavirus epidemic is greater than the global financial crisis. These data suggest a small contraction in the first-quarter economy is a high probability event. Government policies would need to be focused on preventing large-scale bankruptcies and unemployment.”

The economic data on Monday also highlighted a 24.5% decline in fixed-asset investment on a year over year basis that came significantly lower than its previous reading of 5.4% growth. Forecast for fixed asset investment was capped at a 2.8% growth. The Bureau also revealed a 26.4% decline in private sector investment as compared to the same period last year.

Retail Sales Dropped By 20.5% On A Year Over Year Basis

Following an 8% growth in December, retail sales dropped by 20.5% on a year over year basis. Analysts had forecast a 0.8% increase on the retail sales front.

The unemployment rate in China, the Bureau added, jumped to 6.2% in February versus 5.2% in December. The jobless rate was also branded the worst since the start of record-keeping.

According to the experts, the peak of the Coronavirus epidemic in China is over, however, the economy is likely to take a few months before it gets back to normal. The sharply rising cases of Coronavirus across the globe are also fueling the risk of a global recession that will result in a sharp decline in the demand for goods manufactured in China.