China’s Economic Data Are Bad, But Better Than Expected

April 17, 2020 (EIRNS)—While mainstream media gloat about “the first economic slump in decades” on the effect of the lockdown on China’s economy, data published yesterday are better than expected. As German economist Folker Hellmeyer wrote in his newsletter Solvecon Forex-Report, “The effects of the lockdown were mainly located in the 1st quarter of 2020. Accordingly, there was a massive slump in economic output: −6.8% versus a forecast of −6.5% year-on-year or −9.8% versus a forecast of −9.9% quarterly.... So, for the view in the rear view mirror. The view through the front window offers an encouraging perspective. This applies less to retail sales: There, there was a 15.8% year-on-year decrease in March after a previous −20.5% [in January-February]. The forecast was at −10.0%. (Regarding the forecast of −10.0%, it should be noted that there were still restrictions in China as of March.) The shock caused by the virus on the population certainly continues to have an effect on discretionary consumer behavior even after March.

“The picture is different for industrial production,” Hellmeyer continued. “As of March there was a decline of only 1.1% after −13.5% [January-February]. The forecast was −7.3%. In this sector of the Chinese economy, the recovery started more quickly, unexpected by professional market observers.

“Against this background, the question arises, whether China’s developments can be extrapolated to the rest of the world. Basically, it will be that way. However, since China was more resolute, China was also partially open and is likely to recover faster than most others. Basically, the data from China give hope for moderate confidence,”

he concludes.

First data on the lockdown impact on European economies concern the automotive market, which collapsed by 51% in March. The automobile producers association ACEA reported that Italy was the worst performing country in March, with sales off −85.4%, closely followed by France, down −72.2%. Germany, Europe’s biggest market, fell −37.7%.