BEIJING (Reuters – China’s retail sales in its first quarter were lower in coastal regions, where COVID-19-affected areas showed particular weakness. This suggests that there will be more slowing in consumer consumption in the second quarter.

According to data from the local statistical bureaus, China’s largest provincial economies, Guangdong in South China and Jiangsu near Shanghai, saw retail sales growth rates of 0.5% and 1.7% respectively from one year ago. This is below 3.3% nationwide.

Shanghai is China’s biggest city. Retail sales fell 3.8% in the aftermath of its worst COVID-19 infection. After a long lockdown that lasted for several months in April, Omicron cases began to emerge in financial capital Shanghai. The impact of this outbreak is likely to be most severe in the 2nd quarter.

Retail sales declined 3.9% in Tianjin. This is a large port city located near Beijing.

GRAPHIC: China’s first-quarter retail sales growth (https://graphics.reuters.com/CHINA-ECONOMY/CONSUMPTION/byvrjnqgeve/chart.png)

Tough restrictions on mobility and activity, combined with the worst COVID-19 epidemics since 2020, have weighed down already fragile consumer sentiment during the first quarter. This has hampered contact-intensive services such as transport, accommodation, and catering.

China’s quarter-end gross domestic product grew 4.8% in the first quarter compared to 5.5% for its full-year growth goal. Slowing trade and property declines, as well as uncertainties about global supply chain stability during the Russia-Ukraine conflict, also affected the economy.

Capital Economics released a note Tuesday stating that “the pace of household expenditure growth softened during the first quarter, and it is likely to have fallen further at the beginning of the second quarter because virus controls were tightened.”

Given the depressed state of many regions, a recovery can still be made.

The southern province Jiangxi saw a 8.9% increase in retail sales despite the weakness in consumption.

After remaining COVID-free up to mid-March, it led the way in January-March GDP gains among all province-level jurisdictions reporting data.

28 of China’s 31 provinces and regions have published their first quarter economic data. Jilin (Xinjiang), Tibet and Tibet have yet to release theirs, as of Tuesday.

GRAPHIC: China’s first-quarter GDP growth (https://graphics.reuters.com/CHINA-ECONOMY/xmpjoynaavr/chart.png)