A man wearing a mask walks past the headquarters of the People’s Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020.
Jason Lee | Reuters
China’s economy could grow by less than 2% year-over-year, according to Pantheon Macroeconomics Chief Asia Economist Freya Beamish.
China said at the end of Monday that cases of the new coronavirus on the mainland have now surpassed 20,400 with a total of 425 deaths.
The rapid spread of the virus has sparked concern over the potential fallout for the world’s second-largest economy, with businesses beginning to feel the impact from falling demand and the shutdown of huge swathes of the country, many of which serve as economic engine rooms.
Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Beamish said that China could be facing a quarter-on-quarter contraction in GDP (gross domestic product) for the first quarter, once the repercussions of shutdowns and an already slowing economy are factored into projection
The 24 provinces, municipalities and regions which have told businesses to cease operating until at least February 10 accounted for over 80% of national GDP and 90% of exports last year, according to CNBC calculations of data accessed through Wind Information.
“The authorities are saying that there could be 1 percentage point shaved off year-over-year growth, so we get down to the 5% region — that is already a huge admission from the Chinese authorities, particularly in the year when they’ve got this long-term poverty reduction goal during which they need to meet that 6% growth rate, and (Chinese President) Xi Jinping is still talking about that,” Beamish said.
Beijing said last month that its economy grew by 6.1% in 2019, in line with expectations, but Beamish suggested that growth at the end of the year was already “extremely weak.”
“We are thinking in the region of 3.8% year-over-year, and again plugging in those numbers, we’re looking at year-over-year growth of probably less than 2%,” she said, adding that to see those numbers emerging from a Chinese GDP spreadsheet was “quite a shocker.”