China’s factory deflation worsens on virus-beaten demand

China’s factory prices dropped at its worst level in four years. April records indicated frail industrial demand in the world’s second-biggest economy as the COVID-19 pandemic restricts economic growth.

The producer price index (PPI) lost 3.1% from a year earlier, worse than the 1.5% decline in March and larger than the 2.6% forecast rendered by analysts. The data released last week showed an increase in China’s exports but imports fell below analysts’ outlook, indicating weak domestic demand.

China struggles to regain momentum from the historic contraction in the first quarter, with the economy currently suffering from economic paralysis due to quarantine restrictions. But the rapid spread of the coronavirus outside China brought in new worries that the global economy might slide again into a sharp recession.