March 17, 2020 / 12:51 AM / 5 months ago

Goldman sees China's economy shrinking 9% in first quarter amid coronavirus outbreak

BEIJING/SHANGHAI (Reuters) - Goldman Sachs said on Tuesday that China’s economy will likely shrink 9% in the first quarter, underscoring how the coronavirus has disrupted normal business activities, while China reported an uptick in new cases of the disease, most of them imported.

People wear protective face masks on a bus following an outbreak of coronavirus disease (COVID-19), in downtown Shanghai, China March 16, 2020. REUTERS/Aly Song

Goldman cut its estimate for China’s first-quarter gross domestic product growth to a 9% contraction, from a previous forecast of 2.5% growth, citing “strikingly weak” economic data in January and February that was reported on Monday. It also lowered its full-year GDP forecast to 3% growth from an earlier estimate of 5.5%.

For the fourth straight day, imported coronavirus cases in China outnumbered cases of local transmission.

The rising risk of imported cases has prompted some parts of the country to tighten monitoring of foreign travelers, and the Chinese foreign ministry on Tuesday advised its citizens to avoid travel to high-risk countries.

Mainland China had 21 new confirmed cases on Monday, the National Health Commission said, up from 16 a day earlier. Of the new cases, 20 involved infected travelers from abroad.

Raising further concerns about spread of the disease, a man recently returned from Spain has tested positive for the virus - despite showing no symptoms - and has been put under observation and into quarantine, according to a statement on the website of the city of Mianyang, Sichuan.

An additional 25 passengers who had shared a flight with the man and two of his family members have also been subject to quarantine, the statement said.

In contrast to the growing number of imported cases, mainland China had only one case of locally transmitted infection on Monday, in Wuhan, capital of central Hubei province where the flu-like disease appeared in humans late last year.

The capital Beijing accounted for nine of the imported new cases even as it imposed tough restrictions to screen out and isolate infections coming from abroad.

Beijing Capital International Airport has cordoned off a special zone for all international flights, with all disembarking passengers required to submit to health checks.

Transit passengers were sent to their connecting flights, while non-transit passengers were shuttled to a nearby processing venue from which they were dispatched to designated places for compulsory 14-day quarantine.

Beijing also closed its new Daxing airport to international flights and redirected them to the older Capital International Airport in the northeast of the city, in order to contain any new infections in one facility.

On Tuesday, Shanghai extended existing quarantine measures to travelers who have recently visited the United Kingdom, Switzerland, Sweden, Belgium, Norway, the Netherlands, Denmark and Austria.

China’s eastern Shandong province and southwestern Chongqing city will require all overseas arrivals to be quarantined in designated locations or residences for 14 days, the official Xinhua news agency said on Tuesday.

In the central city of Wuhan officials said they would begin requiring overseas arrivals to undergo 14-day quarantine at a central location at the people’s own cost, emulating Beijing.

Wuhan, a transport and industrial hub of 11 million people, is the epicenter of China’s outbreak and the origin of the pandemic that has now infected more than 100,000 people beyond China’s borders.

Officials in the city initially tried to cover up the outbreak when it began late last year, but Beijing has lately sought to emphasize the positive role China has played in controlling the global spread of the disease.

An editorial in the official China Daily said the rest of the world should learn from China and follow the principles of early detection, early quarantine and early treatment.

Top Chinese diplomat Yang Jiechi told U.S. Secretary of State Mike Pompeo on Monday that attempts by U.S. politicians to denigrate China’s efforts to curb the coronavirus would not succeed, and could lead to retaliation.

The tally of confirmed U.S. cases has multiplied rapidly in recent days, exceeding 4,660. At least 87 people in the United States have died of the disease.

Around the world, there have been more than 7,160 deaths linked to the coronavirus across 163 countries and territories, according to a Reuters tally based on official statements. China now accounts for less than half of those deaths.

ECONOMIC RECOVERY

With the numbers of new infections dwindling in China, Xinhua news agency reported that a first batch of medical workers who had traveled to Hubei province to assist with the crisis had departed on Tuesday morning.

The economic outlook was also brightening, with state planning officials saying China’s economy would return to normal in the second quarter as factories reopened, businesses resumed trading and consumers started spending again.

Slideshow (4 Images)

“Over 90% of large-scale industrial companies in regions outside of Hubei have resumed production, and resumption rates for places including Zhejiang, Jiangsu and Shanghai are close to 100%,” Meng Wei, spokeswoman of the state planner told a news briefing on Tuesday.

The number of railway loadings had returned to normal levels, and civil aviation, ports and water transportation were all operating normally, she said.

Reporting by Ryan Woo, Se Young Lee, David Stanway and Andrew Galbraith; Additional reporting by Brenda Goh; Editing by Lincoln Feast, Stephen Coates, Tom Hogue and Louise Heavens

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