China’s economy shrank by 6.8% in the first quarter of the year — the first time it has done so on record since 1992 — and now analysts say that the economy is expected to continue to contract for the rest of the year.

The country’s economy improved marginally compared to the start of the coronavirus pandemic but has not managed to stop the recession, according to a report from New York-based research institute China Beige Book, which interviewed 3,304 companies in China between mid-May and mid-June.

CBB, which publishes independent data on the China economy, said that key metrics, including manufacturing profits, capital expenditures and retail sales volumes, remained at historically low levels and had almost not improved from the first quarter.

The retail sector was in the worst situation following sharp declines in revenues and profits. A huge drop in credit costs have failed to encourage retailers to borrow, revealing the continued weaknesses of the sector.

In contrast, the manufacturing sector expanded compared to the first quarter. According to CBB, however, employment in this sector increased in April compared to March, and was worse than what official government-issued numbers indicated. The services sector performed the best, per CBB’s report.

CBB identified the sharp drop in global demand as the main factor behind China’s slow economic recovery, with regions more dependent on international trade showing the poorest performances. Interior regions, meanwhile, saw growth due to increased domestic orders.

While growth will return to the Chinese economy, CBB said that it did not mean that growth would return to pre-pandemic levels. Unless there was a dramatic recovery of global demand, incremental quarterly improvements would not be enough to help China escape economic contraction this fiscal year. China’s central government has tried to increase domestic consumption, but according to data from the World Bank, exports of goods and services still account for an important part of the country’s economy, making up 19.5% of China’s GDP in 2018.

The pessimistic view reported by CBB contrasted with the optimism held by other economists and government officials, who expect the economy to grow this quarter and even expand this year. According to IMF data in April, the global economy is predicted to contract by 3%, but China and India are expected to be the only two of 16 countries to see growth at 1.2% and 1.9% respectively.

The Chinese government is due to release official GDP data for the second quarter on July 16.

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