BEIJING (Reuters) -China’s imports unexpectedly fell in March as COVID-19 curbs across large parts of the country hampered freight arrivals and weakened demand, while export growth slowed slightly and analysts expected trade to worsen in the second quarter.

Inbound shipments fell 0.1% from a year earlier in March, marking the first decline since August 2020, customs data showed on Wednesday. That compared with a 15.5% gain in the first two months of the year and an 8% increase forecast by analysts in a Reuters poll.

Exports rose 14.7% in March, beating analyst expectations for a 13% rise, although it slowed from a 16.3% gain in January-February period.

“The slowdown in exports was limited, while import growth collapsed quite a bit, reflecting shrinking domestic demand,” said Wang Jun, chief economist at Zhongyuan Bank.

“Trade data in April is likely to worsen too on anti-COVID measures in the Yangtze River and Pearl River deltas, which would significantly slow customs clearance efficiency. The real pressure is in the second quarter.”

China’s strong trade performance seen over the past two years is set to slow this year as other countries emerge from COVID lockdowns and higher energy prices and global logistics disruptions caused by Russia’s war in Ukraine squeeze exporters.

Li Kuiwen, customs spokesperson, said China’s trade now faced many challenges and risks due to factors abroad and at home.

“We need to make greater efforts to achieve the target of stabilising trade,” Li told a briefing on Wednesday.

Factory activity in March fell as the declines in export order accelerated, manufacturing surveys showed, with firms reporting clients cancelled or suspended orders due to the uncertainties about the Ukraine war.

Qi Yong, general manager at a consumer electronics distributor Shenzhen Muchen Technology Co, told Reuters that export orders from European clients fell 20% in March from a year ago, although outbound shipments for North America remained brisk.

Qi said this was due to “the war-induced weak purchasing power and risks of economic slowdowns in European economies,” adding that “exporters with exposure to the bloc may continue to feel the pinch.”

China posted a trade surplus of $47.38 billion in March, more than double the forecast $22.4 billion, thanks to the unexpected decline in imports. The country reported a $115.95 billion surplus in January-February.

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