China’s economy shrank in April, amid COVID outbreaks and lockdowns that dragged down the industrial and consumer sectors. to the weakest levels since early 2020after millions of residents were confined to their homes and factories were forced to halt production.
Industrial production fell 2.9 percent in April from a year earlier, worse than an estimate in a survey of economists from Bloomberg.
Retail sales contracted 11.1 percent in the period, below the projected 6.6 percent drop. In addition, the unemployment rate rose to 6.1 percent, higher than the forecast of 6 percent.
China’s economy has ‘paid’ a huge price due to the government’s stringent efforts to keep the SARS-CoV-2 virus at bay. Beijing has insisted on sticking with its COVID Zero strategy to curb infections, even though the high transmissibility of the omicron variant it puts cities at greater risk of repeatedly closing and reopening compared to previous strains.
“The COVID outbreaks in April had a huge impact on the economy, but the impact is short term”, assured the National Statistics Office in a statement. “With progress in controls and policies to stabilize the economy, the economy is likely to recover gradually.”
The economic impacts of the zero tolerance policy have made China’s ambitious growth target of 5.5 percent out of reachand is weighing on global growth prospects.
Beijing has signaled that policymakers will step up support for the economy, with Premier Li Keqiang recently urging officials to ensure stability through fiscal and monetary policy.
The People’s Bank of China took measures this Sunday to ease the housing crisis by lowering mortgage rates for first-time homebuyers. He left the one-year policy lending rate unchanged on Monday as inflationary pressure and concerns about capital outflows reduce the scope for further easing.