(Reuters) – The coronavirus likely halved China’s economic growth in the current quarter compared with the previous three months, more severe than thought just three weeks ago and triggering expectations for earlier interest rate cuts, a Reuters poll found.
So far, the virus outbreak has spread from China to more than 80 countries, infecting more than 95,000 people and killing more than 3,000. It has also doused expectations for a global economic rebound and triggered an unscheduled U.S. interest rate cut this week, the biggest since the global financial crisis.
The March 3-5 poll of more than 40 economists, based both in and outside mainland China, forecast growth to fall to a median of 3.5% this quarter from 6.0% in the fourth quarter of 2019, a full percentage point lower than predicted in a Feb. 14 poll.
The range of views was wide, from two banks saying no growth at all to one saying 5.0%.
Under a worst-case scenario, the median forecast for Q1 was 2.4%, compared with 3.5% in the previous poll – essentially meaning the worst-case view from three weeks ago is now the central scenario for private sector economists.
Growth is still expected to bounce back in Q2, to 5.6%, slightly lower than the 5.7% forecast three weeks ago. But even there, the range of forecasts was wide, 3.7%-6.5%.
“It’s hard to come up with an optimistic second quarter and the best case I can really suggest is that the second half of the year might start to look a bit more normal,” said Rob Carnell, head of Asia-Pacific research at ING.