Signs of Economic Recovery - China
China was the first country to be hit by the deadly virus and it has also become the first country to have defeated the virus. The country is already showing signs of economic recovery, the details of which are provided below.
Back to Normal
- With China achieving success in the fight against coronavirus, the country's economy might start to recover soon from the impacts of the virus. Chen Yulu, deputy governor at People’s Bank of China, said, "Economic indicators will likely show significant improvement in the second quarter and the Chinese economy will return to its potential output level rather swiftly."
- There have been reports of factories and workplaces going back to normal in China. Estimates from Bloomberg Economics have shown that 85% of the activity has already returned.
- According to the Ministry of Commerce, approximately 70% of the key import and export firms have already resumed work with production capacities going up to 70%. However, as the industry is going back to normal, China might face a shortage of demand due to the virus spreading in other countries including Europe and the US.
Retail Bouncing Back
- The retail sector in China is also showing positive signs after the country's fight against coronavirus has proved effective.
- Foot traffic in malls has been reported to have increased. A US-based company has reopened 42 of its retail stores in China.
- Other retail operations opening back up for public dealing include Hermes's retail stores and 85% of the 3,600 retail stores of the jewelry giant, Chow Tai Fook Jewellery Group Ltd.
Stocks Gaining Strength
- As China became the first country to win the fight against COVID-19, the economic collapse that is visible through global financial markets is not being seen anymore in China.
- Chin Ping Chia, Hong Kong-based managing director and head of business strategy and development at China A investments, noted that "a lot of investors appear willing to look beyond the ugly short-term hit the country's economy is taking to contain the virus."
- Aaron Costello, consultant at Cambridge Associates LLC, said, "China has emerged as an unlikely safe haven, given both the stability of its yuan in foreign-exchange markets and the fact that the A-shares market has held up better than expected."
- As China fights back and activities start going back to normal, there are speculations that the country might still not be able to quickly return to where it was before the virus hit due to several reasons. The reasons include the spread of the virus to China's key trading partners, managing the logistics of the return of workers from their home provinces to where they work, and other similar reasons.
- Despite these concerns, ANZ Research Institute expects most economic activities going back to normal by the first half of April.