China suffers first GDP decline on record as coronavirus cripples economy

The world’s second-largest economy shrank 6.8% from a year ago in the three months ending in March after factories, shops and travel were closed to contain the infection, official data showed.

China suffered its worst economic contraction in the first quarter of 2020 as the coronavirus outbreak paralysed production and spending, whichmakes recovery harder than initially expected. This is the first recorded decline in China’s GDP data since it started publishing in 1992. According to AP, this was China’s worst performance since before market-style economic reforms started in 1979.

The world’s second-largest economy shrank 6.8% from a year ago in the three months ending in March after factories, shops and travel were closed to contain the infection, official data showed Friday.While China has managed to get large parts of its economy up and running from a standstill in February, analysts say policymakers face an uphill battle to revive growth as the coronavirus pandemic ravages global demand.

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Some forecasters earlier said China, which led the way into a global shutdown to fight the virus, 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.

Retail spending, which supplied 80% of China’s economic growth last year, plunged 19% in the first quarter from a year earlier, below most forecasts. Investment in factories and other fixed assets, the other major growth driver, sank 16.1%.On a quarter-on-quarter basis, GDP fell 9.8% in the first three months of the year, the National Bureau of Statistics said, just off expectations for a 9.9% contraction, and compared with 1.5% growth in the previous quarter..Read More

Why $190 bn bank loan clean-up is the only way to revive India’s growth

So far, lenders have recovered the equivalent of about $11 billion, or about 43 per cent, of the $25 billion in dues admitted by courts in 94 cases of default, according to a Crisil report

forms meant to clean up $190 billion of stressed bank loans will be crucial to reviving economic growth during Narendra Modi’s second term as prime minister. Just days after a landslide electoral victory, Modi is being forced to focus on the economy after the slowest expansion in five years. A crisis among shadow lenders has curbed advances from the sector and hit consumer spending in recent months, coming on top of years of sluggish credit growth at banks hamstrung by non-performing loans. Revitalising lenders is essential to jump-starting private investments and consumer spending.

Investors expect Narendra Modi to complete reforms started during his first term when India instituted a time-bound bankruptcy process, putting the business community on notice by stripping assets off the biggest defaulters and selling them. While the two-and-a-half-year-old law has helped banks improve the rate and pace of bad-debt recovery, prolonged court battles have delayed transactions and deterred some foreign investors.

“We have to find a way to speed up the process,” said Rajnish Kumar, chairman of State Bank of India Ltd., India’s largest bank. “The results so far — despite the delays — have been good for the system,” he said in a recent interview, adding that the bankruptcy law needs to be periodically reviewed. As of March, about a third of India’s bankruptcy cases had exceeded the 270-day deadline stipulated by law, according to government data.

In fact, of 12 large debtors — the so-called dirty dozen — that were pushed into bankruptcy courts in 2017 by the banking regulator, only five have been successfully sold with lenders recovering about 39 per cent of dues on average. The rest have been delayed by problems including a slew of challenges by previous owners, losing bidders, financial and operational creditors. Potential bidders have also become wary of India’s evolving insolvency process after court rulings in the past year allowed late bids to be considered in the interest of greater recovery…