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Impact of epidemic on China's GDP in 2020
2020-02-20At the end of the year and the beginning of the year, when the Sino US trade war was easing and China's economy was recovering, the new coronavirus pneumonia suddenly broke out in Wuhan and spread throughout the country. On January 23, Wuhan was closed, and on January 31, the World Health Organization announced a "global emergency". As of February 19, there were 75207 confirmed cases, including 74282 in China and 925 in the world; 2012 people died, including 2009 Chinese and 3 international. So far, the epidemic is still spreading, and the number of confirmed cases is still increasing. The epidemic not only caused panic among ordinary people, but also had a serious impact on the economic activities of all walks of life. The normal production and life of the whole society were basically in a state of suspension. The stock market experienced severe shocks, and bond interest rates fell significantly.
On the whole, the epidemic has a huge negative impact on China, Asia and the world economy, especially the tertiary industry (52.2% in 2018), which accounts for the highest proportion of GDP, suffered a heavy blow. From the perspective of specific industries, catering, hotels, tourism and entertainment and other industries are the most affected, and corporate passenger flow, revenue and cash flow have all declined precipitously. Industrial enterprises are also under the pressure of shortage of personnel, delayed commencement and blocked logistics. At the beginning of this week, the resumption rate of industrial enterprises monitored by major securities companies was only 20-30%. The epidemic situation had a serious impact on the supply chain, and SMEs suffered the most.
In the face of the epidemic, the central government quickly introduced various policies, including fiscal and monetary policies, to ease the negative impact on the economy. For example, the Ministry of Finance issued ahead of schedule an 848 billion local government debt limit to stimulate infrastructure investment, and the Central Bank cut the medium-term lending convenience rate by 10 basis points to 3.15%. We believe that the government will further introduce specific policies and measures to ease the pressure on enterprises. As the epidemic is controlled and gradually eased, all regions will actively promote the resumption of work, and China's GDP growth is expected to resume in the second quarter and the second half of the year.
In view of the impact of the epidemic on China's economy, mainstream financial institutions at home and abroad have made calculations, and we have summarized them. On average, the GDP growth rate is expected to be 3.71% in the first quarter of this year and 5.44% in the whole year. We judge that under the impact of New Coronary Pneumonia, the GDP growth rate in the first quarter of this year will probably be lower than 4%, and the annual GDP growth rate will be 0.5 to 1 percentage point lower than the original expected 6.0%. The epidemic will eventually pass, but it will have a profound impact on China's economy. Huaxin Capital will continue to track various changes and report to investors in a timely manner.
Prediction of China's GDP growth by various institutions
|
Q1 2020 |
The whole year of 2020 |
|
|
Guotai Jun'an |
3.90% |
5.80% |
|
HSBC Bank |
4.10% |
5.30% |
|
UBS |
3.80% |
5.40% |
|
Goldman Sachs |
4.00% |
5.50% |
|
Citigroup |
3.60% |
5.30% |
|
BOC International |
3.60% |
5.60% |
|
Merrill Lynch |
3.00% |
N/A |
|
Moody's |
N/A |
5.20% |
|
average |
3.71% |
5.44% |
Data source: research report of professional institutions
