Bleak figures from China and US show economic hit from virus

Bleak figures from the world’s two largest economies underscore how quickly the coronavirus is delivering a massive economic blow.

China on Friday reported GDP shrank 6.8% from a year ago in the quarter ending March, its worst contraction since before market-style economic reforms began in 1979.

In the US, the world’s largest economy, the ranks of the unemployed swelled toward levels last seen during the Great Depression.

Still, the economic data from China was not as bad as some had feared, prompting shares in Asia to surge. That was after Wall Street also rose, powered by buying of Amazon, health care stocks and other market niches that are thriving in the coronavirus crunch.

The recovery for workers is likely to take a long time, however.

Some forecasters earlier said China might rebound as early as this month, but they have been cutting growth forecasts and pushing back recovery timelines as negative trade, retail sales and other data pile up.

The US government reported 5.2 million more Americans applied for unemployment benefits last week, bringing the four-week total to 22 million — easily the worst stretch of US job losses on record. The losses translate to about one in seven American workers.

South Korea on Friday reported its worst jobless figures in more than a decade, with almost 200,000 fewer people working in March than in the same month a year earlier.

HEALTH Coronavirus
(PA Graphics)

US president Donald Trump reacted to the pressure on the economy by outlining a phased approach to reopening parts of the country where the pandemic is being brought under control.

He told the nation’s governors that restrictions could be eased to allow businesses to reopen over the next several weeks in places that have extensive testing and a marked decrease in Covid-19 cases.

“We are not opening all at once, but one careful step at a time,” Mr Trump said, adding that his new guidelines give governors the freedom to act as they see fit.

His comments marked an abrupt change after a week in which he clashed with governors over his claim that he had “total” authority over how and when the country reopens.

Virus Outbreak Trump
President Donald Trump speaks about the coronavirus, accompanied by Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (Alex Brandon/AP)

Worldwide, the outbreak has infected more than 2.1 million people and killed more than 144,000, according to a tally by Johns Hopkins University, though the true numbers are believed to be much higher.

The death toll in the US topped 33,000, with more than 670,000 confirmed infections.

China raised its death toll to over 4,600 after the city of Wuhan, where the outbreak first took hold, added nearly 1,300 deaths.

State media said the undercount was due to insufficient admission capabilities at overwhelmed medical facilities. Questions have long swirled around the accuracy of China’s case reporting, with some saying officials sought to minimise the outbreak.

The spread of the virus is declining in such places as Italy, Spain and France, but rising or continuing at a high level in Britain, Russia and Turkey, authorities said.

Singapore reported a record daily high of 728 new cases as it ramped up its testing at dormitories crammed with foreign workers.

Virus Outbreak Indonesia
A shop owner waits for customers behind a sheet of protective plastic during the coronavirus outbreak in South Tangerang on the outskirts of Jakarta, Indonesia (Tatan Syuflana/AP)

UN Secretary-General Antonio Guterres warned that the economic impacts of the pandemic were putting many of the world’s children in jeopardy, and urged families and leaders everywhere to help protect them.

The UN chief said in a video statement that the lives of children were being “totally upended” by Covid-19, with almost all students out of school, family stress levels rising as communities face lockdowns, and reduced household income expected to force poor families to cut back on essential health and food expenditures, which would affect children in particular.

In China, retail spending, which accounted for 80% of economic growth last year, plunged 19% in the first quarter from a year earlier, below most forecasts. Investment in factories, real estate and other fixed assets, the other major growth driver, sank 16.1%.

Factories and other businesses were allowed to reopen even as the United States and Europe tightened controls. Cinemas, hair salons and other enterprises that are deemed nonessential but employ millions of people are still closed, and tourism is struggling to recover.

New York, the most lethal hot spot in the US, reported more encouraging signs, with a drop in the daily number of deaths statewide and the overall count of people in the hospital.

“We’ve controlled the beast,” governor Andrew Cuomo said. Still, Mr Cuomo extended the state’s lockdown through at least May 15.

New York City is lining up 11,000 empty hotel rooms to quarantine people living in crowded apartment buildings.

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