LONDON (ICIS)--The sharp slowdown in industrial activity in China and wider Asia due to the coronavirus crisis may last until the middle of the second quarter, OPEC said on Wednesday.
Annual crude oil demand growth will be hit after the extent of the crisis in China, the world’s largest importer, sharply reduced economic activity in the first quarter.
Industrial production is only coming back on track this week, and doing so gradually.
Signs of the crisis bottoming out seemed to appear on Wednesday, when China’s authorities said the rate of infections and deaths related to the virus (Covid-19) were slowing down.
“By assuming that the spreading may be contained by Q2 2020, supply chain disruptions remain limited and by mid Q2 2020 by the latest, consumer and business confidence is [expected to be] recovering,” said OPEC.
“China’s growth is forecast to slow down significantly in H1 2020. This is also impacting other Asian economies and China’s main global trading partners.”
OPEC pointed to India and the eurozone’s economic slowdowns as other reasons for crude oil demand to slow down this year.
However, the crude oil producing cartel added that the robustness of the US services sector, as well as those in other developed nations, and China’s latest stimulus would offset the negatives somewhat.