China’s GDP growth sinks to 44-year low
China’s GDP growth rate slows dramatically, as France and UK tally devastating effect of COVID-19
China’s gross domestic product growth (GDP) will sink to a 44-year low in 2020, as a result of the COVID-19 pandemic, with European markets such as France and the UK also reporting dramatic economic contraction over the rest of the year.
Growth for China in 2020 was predicted to be 2.5 per cent, according to analysis by Reuters. The research reports this is the weakest growth since 1976, the year the Cultural Revolution ended, and in sharp contrast to the 6.1 per cent growth of 2019.
The survey also predicted China’s economy in the first quarter will contract by 6.5 per cent year-on-year, for the first time since at least 1992 when the country first started issuing quarterly GDP data.
In Europe, France’s finance minister has warned that the French economy is expected to contract 8 per cent this year, instead of the 6 per cent he had previously warned.
An extension to the French lockdown is expected to put further strain on the French economy, with the government more than doubling rescue efforts to keep the French economy relatively afloat, pumping €100bn ($107bn, £85bn) into rescue efforts.
In the UK, the Office for Budget Responsibility (OBR) forecast that the UK budget deficit could hit £273bn in the 2020/21 tax year, five times its previous estimate and equivalent to 14 per cent of gross domestic product, its biggest since World War Two. This forecast is based on six months of economic disruption from lockdown measures.
Reuters reported that the UK economy is expected to shrink by 35 per cent in the April-June period, which represents the projected period that lockdown measures will be in place.
The OBR said public sector net debt could exceed 100 per cent of GDP during the 2020/21 financial year but end it at around 95 per cent of GDP.