By Kristy Dorsey
Economic activity in China rebounded sharply during March from the previous month’s record lows, offering a glimmer of hope that a V-shaped recovery can be achieved in other parts of the world when the Covid-19 pandemic is brought under control.
However, experts have cautioned that the world’s second-largest economy has not yet returned to full throttle, and is facing further headwinds. Chief among these is slumping demand for its goods in countries where the virus more recently started taking hold.
For manufacturing, the official Purchasing Managers’ Index rose to 52, up from a record low of 35.7 in February and ahead of the consensus estimate of 45. Anything above the 50 mark signals expansion, with that below denoting economic contraction.
For non-manufactured goods, the March PMI jumped to 52.3 against the previous month’s reading of 29.6. Economists had been expecting a figure of 42.1.
Mihir Kapadia, chief executive of Sun Global Investments, said there remains long months of battle in Europe and the US where the pandemic is “far from over”.
“Global economic growth and trade will continue to be affected until the disease is contained across the world,” he said. “But as China shows, there is hope at the end of the tunnel.”
The best-case scenario for the UK is a V-shaped recession, with an abrupt downturn followed by an equally sharp recovery as activity quickly resumes post-pandemic. This would contrast with the malaise following the 2008 financial crisis, when recovery was weak and protracted.
In a note issued after the release of the Chinese PMI data, economists at Nomura said the average of the PMIs for February and March was only 43.9 – still well below the average of approximately 50 prior to the Covid-19 outbreak.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here