The coronavirus health crisis likely knocked China's economy into its first decline since at least 1992 in the first quarter, raising the heat on authorities to do more to restore growth as mounting job losses threaten social stability.
The outbreak, which first emerged in China's central Hubei province late last year, ground activity in the world's second-largest economy to a halt as drastic curbs on people movement shut down factories, transport and shopping malls.
While those restrictions are gradually being lifted, similar lockdowns now in effect in other major economies hit by the pandemic have significantly darkened the outlook for global demand, which would hurt China's massive export sector.
Analysts expect China's gross domestic product to have shrunk 6.5% in January-March from a year earlier, according to a Reuters poll. That would reverse a 6% expansion in the fourth quarter of 2019 and mark the first decline since at least 1992 when official quarterly gross domestic product (GDP) records started.
"It's difficult to see a quick recovery in China's economy given the impact from the global pandemic," said Wang Jun, Beijing-based chief economist at Zhongyuan Bank.
"Economic growth will also depend on the strength of stimulus policies. Fiscal policy will play a leading role while monetary policy will be modestly expansionary."
Forecasts by 57 analysts polled by Reuters ranged from a 28.9% GDP contraction to a 4% expansion for the first quarter.
On a quarterly basis, GDP is expected to have fallen 9.9% in January-March, compared with 1.5% growth in the previous Quarter.
For 2020, China's economic growth is expected to slow sharply to 2.5% from 6.1% in 2019, a separate Reuters poll showed, which would be the weakest clip since 1976, the final year of the decade-long Cultural Revolution that wrecked the economy.
China releases first-quarter GDP data on Friday (0200 GMT), along with March factory output, retail sales and fixed-asset investment.
Analysts polled by Reuters expect industrial output to fall 7.3% in March from a year earlier, easing from a 13.5% fall in the first two months, and retail sales could fall 10%, versus a 20.5% drop in the first two months.
Fixed-asset investment is forecast to fall 15.1% in the first three months from a year earlier, moderating from a 24.5% slide in the first two months, according to the poll.
China's exports and imports continued to slide in March, albeit at a slower pace than February. Analysts say the outlook remains grim as the pandemic brings business activity in China's major trading partners to a standstill.
More help on the way
To arrest the slump, China's leaders have flagged measures, including increased budget spending and more local government special bonds for big-ticket projects, as well as the country's first special treasury bond issuance since 2007.
Zhongyuan Bank's Wang said local governments could be allowed to issue about 3.5 trillion yuan ($496.32 billion) in special bonds this year, along with special treasury bond issuance of around 1 trillion yuan.
Sources told Reuters the People's Bank of China (PBOC) would ease some of its monetary settings but would not follow the U.S. Federal Reserve's steep rate cuts or quantitative easing, mindful of debt and property market risks.
In one such move on Wednesday, the PBOC cut the interest rate on its medium-term lending facility by 20 basis points, paving the way for a similar cut in the benchmark lending rate on April 20.
The government has also rolled out a raft of measures, including more fiscal spending, tax relief and cuts in lending rates and reserve requirements, and low-cost loans for some firms, as the pandemic raises fears of a global recession.