Hong Kong, May 5: China's Covid-19 lockdowns have taken a toll on the country's economy, with Beijing's massive services sector shrinking at the second-fastest rate on record.
Covid lockdowns hampered businesses in the world's second-largest economy, which were already dealing with rising energy and raw material costs, as per CNN. According to a survey released by IHS Markit on Thursday, the Caixin purchasing managers' index, a closely watched indicator for measuring the state of the economy, fell to 36.2 in April from 42 in March. Anything less than 50 indicates contraction, whereas anything more than that indicates expansion.
The nearly 6-point drop in services activity in April was second only to the collapse in February 2020, when China's economy came to a halt as it battled to contain the initial outbreak that started from Wuhan. The Caixin services PMI fell to 26.5 in February from 51.8 in January.
The services sector employs over 40% of the workforce and accounts for more than half of the country's GDP. China's manufacturing sector shrank last month, according to survey data, and the world's second-largest economy regressed in April.
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China is seeing its biggest outbreak in more than two years as the highly transmissible Omicron variant spreads aggressively. According to CNN's latest estimates, at least 27 Chinese cities are currently under complete or partial lockdown, affecting up to 185 million people across the country.
This also includes Shanghai, which is the nation's leading financial hub and a major manufacturing and shipping centre. The city remains under lockdown since March 28.
Several economists have downgraded their China GDP growth targets for this year, citing risks posed by the country's zero-Covid policy. Last month, the International Monetary Fund lowered its China growth forecast to 4.4%, well below the government's official target of about 5.5%.
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-PTC News