peribiden The Chinese economy slowed down quickly in April because of the cost of the deteriorating outbreak of Covid and the rigorous approach of the nation to eliminate the virus to take victims.
That is the prospect of the Bloomberg aggregate index from the first eight indicators for this month. The overall gauge dropped under the sign that separated the increase from the worsening conditions, and reached the worst level since April 2020, showing the current outbreak waves have given a serious blow to the economy.
The results for March were revised down from 5 to neutral level 4 after calculating in the decline in the purchase manager index that month. The contraction that almost crossed in PMI marked a turning point for the economy and came when daily COVID cases jumped from around 100 to around 8,000 a day, encouraging locking and restrictions throughout the country.
Locking in big cities in China including Shanghai has expanded until April, continuing the second largest economy in the world. The financial market plummeted Monday after the government ordered a mass test in Beijing and locked the capital part.
The service industry has suffered in March, with the most contracted consumer expenses since mid 2020. The possibility of industries such as trips and restaurants was even worse in April because more people lived at home, either because they were forced to do it or they were worried about the possibility of infection when it comes out.
While the manufacturing sector seems to be less vulnerable than services, restrictions on road and port transportation have limited the operations of several companies, especially in areas inside and around Shanghai.
Small business trust dropped to the lowest level in more than two years in April, according to the Standard Chartered PLC survey of more than 500 small companies, mainly due to the impact of large -scale locking. Business sentiment also weakened sharply, with the ‘expectation’ sub-index rising to the lowest 26 months, the survey showed.
Both production and demand in small and medium companies see “sharp damage” in that month, the possibility of burdening their appetite and investment, Chartered Standarded Hunter Chan and Ding Shuang economists, wrote in a report.
“Limitation of prolonged and strict mobility drags business activities in labor -intensive industries, intensive contact services and real estate sectors,” they said. “In addition, SMEs that focus on domestic are more affected by disturbances than export -oriented SMEs.”
Home sales continue to dive and car sales have dropped this month, despite loosening the rules about buying houses in more than 100 cities and government policies that encourage the purchase of large ticket goods such as cars and household appliances.
One bright spot for the economy is the fact that external demand has continued to be strong so far this year. South Korea’s exports, the main indicator for global trade, rose faster in the first 20 days of April than in March, especially supported by strong US demand. However, shipping to China is barely growing, showing weak domestic demand.
The prospect is bleak, with Chinese compliance with Covid Zero’s strategy which means more cities can be placed under locking. The benchmark stock index has lost nearly 10% of its value this month and has dropped 23% this year, while economists have cut their growth estimates for China on widespread restrictions. Without new and stronger policies to sustain the economy, the country’s ambitious target of around 5.5% of economic growth this year seems to have increased.
