China’s economy encountered its first contraction in 28 years in the first quarter as the coronavirus shut down factories and put millions out of work.
Gross domestic product (GDP) fell 6.8% in January-March year-on-year, official data showed on Friday. It was the first contraction in the world’s second-largest economy since at least 1992, when official quarterly GDP records were first published.
Analysts say Beijing faces an uphill battle to revive growth and stop massive job losses. Further, weaker domestic consumption, which has been the biggest growth driver, remains a concern.
Industrial output fell by a less-than-expected 1.1% in March from a year earlier. Highlighting the challenges in consumption, however, was a 15.8% fall in retail sales, which was larger than expected.
The virus has infected more than 2 million globally and killed more than 140,000. China, where the virus first emerged, has reported more than 3,000 deaths.
China’s stability-obsessed leaders have pledged more steps to combat the slump.
President Donald Trump laid out new guidelines for U.S. states to emerge from a coronavirus shutdown in a staggered, three-stage approach.
Some European countries have announced plans to ease restrictions as well.
START TRADINGForex – First contraction for the Chinese economy
Sentiment was boosted overnight by a media report detailing encouraging partial data from experimental drug trials on severely ill COVID-19 patients. News of Trump’s plans to reopen the world’s largest economy was also taken by investors as a positive sign.
The dollar ticked lower as investors, cautiously optimistic about President Donald Trump’s plan to reopen the economy, regained some appetite for risk.
The dollar also fell against the euro and the British pound. But it strengthened against the Japanese yen and the Swiss franc. The greenback remains on track for a small weekly gain after the safe-haven rally this week on dismal data from the United States.
The Canadian dollar edged higher against its U.S. counterpart on Friday. The currency clawed back some of this week’s decline. Plans to gradually reopen economies hit by the coronavirus outbreak bolstered risk appetite. The loonie was trading 0.1% higher at 1.4063 to the greenback, or 71.11 U.S. cents.
As the dollar fell, the euro rose 0.41%. The euro has fallen about 1.36% against the dollar already this month. It is facing its biggest monthly fall since July last year. The common currency hit its lowest against the Swiss franc in almost five years earlier this week.
Sterling was stable on Friday amidst a broad-based weaker dollar. Britain said it would extend its coronavirus lockdown for at least three more weeks.
Since then, sterling has recovered by nearly 7% against the euro. It was little changed at 87.05 pence, compared with a low of 0.95 pence on March 19.
Against the dollar, the pound had a bumpy ride but it was last up by 0.4% at $1.2503.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money