The sharp decline in Chinese exports which decimated the economy in the first half of Q1 eased slightly in March, according to official figures, but the longer-term outlook remains gloomy as exports for the rest of the year are set to be to the downside.
Financial markets have reacted positively to signs that the pandemic may be waning but commentators warn that the true impacts on markets are likely to be deep. US markets have posted some of the largest rises in 45 years but underlying weaknesses are set to be exposed.
“The above-expectation March trade figures do not mean that the future is carefree,” Zhang Yi, Beijing-based chief economist at Zhonghai Shengrong Capital Management, commented.
ZSCM predicts that Chinese first-quarter gross domestic product data at the end of this week will likely deliver the first quarterly slump since at least 1992 – posting a contraction of as much as 8%.
“A decline in exports throughout the second quarter has been the market consensus now and a drop of 20% or more is a high-probability event. For policymakers, more policies should be rolled out to address the possible societal issues stemming from mass-scale unemployment,” Zhang said.
China’s overall trade surplus last month stood at $19.9 billion, compared with an expected $18.55 billion surplus in the poll and a deficit of $7.096 billion in January-February.
“Shrinking global demand is set to cause a shock to our country’s exports, and issues such as declining export orders have gradually emerged. The difficulties facing our foreign trade development cannot be underestimated,” Li Kuiwe, trade representiatve said.
In the UK, financial sector confidence has also slumped with a survey by CBI/PwC showing that only 12 per cent of firms are more optimistic about the overall business situation compared with three months ago.
“With the peak of the economic impact to come, equipping the sector to deliver for business is crucial in supporting the growth recovery beyond the pandemic,” Rain Newton-Smith, Chief Economist at the CBI, said.