China’s trade falls sharply because there isn’t much demand and there are problems at home with COVID.

China’s exports and imports fell much more quickly than expected in November. Weak global and domestic demand, production problems caused by COVID, and a drop in property prices in China all put pressure on the world’s second-largest economy.

Exports dropped 8.7% from a year earlier in November. This was a bigger drop than the 0.3% drop in October, and it was the worst performance since February 2020, according to data released by the government on Wednesday. Analysts had predicted a drop of 3.5%, which was much less than what happened.

Since August, shipments to other countries have slowed down. This is because rising inflation, interest rate hikes in many countries, and the crisis in Ukraine have brought the world economy close to a recession.

Related: European shares slip with China’s COVID checks in focus

In a note to clients, Julian Evans-Pritchard, a senior China economist at Capital Economics, said that exports are likely to drop even more in the next three months.

“The loosening of (China’s) virus restrictions will give exports a small boost, but it won’t be enough to make up for the fact that manufacturers no longer have to deal with a big problem,” he said.

“The drop in global demand for Chinese goods due to the end of the pandemic and the coming global recession will have a much bigger effect.”

Overall, the bad data showed that the new COVID restrictions were having an effect in many Chinese cities, like the manufacturing hubs Zhengzhou and Guangzhou, where the number of infections went up last month.

Foxconn, an Apple (NASDAQ:AAPL) supplier, said that sales in November were 11.4% lower than the same month last year. This was because of problems with COVID controls at the world’s largest iPhone factory in Zhengzhou.

According to the Shanghai Shipping Exchange, freight rate indexes from Chinese ports to Europe and the U.S. west coast went down by 21.2% and 21.0%, respectively, in November from October. This shows that exports are getting weaker because of low demand from other countries.

Widespread COVID restrictions also hurt importers. Shipments coming in went down by 10.6%, which was much more than the 0.7% drop in October and less than the 6.0% drop that was expected. The downturn was the worst since May 2020. This was partly because the year before was so good.

This led to a smaller trade surplus of $69.84 billion, down from a surplus of $85.15 billion in October. This was the lowest trade surplus since April, when Shanghai was shut down. Analysts thought there would be a surplus of $78.1 billion.

In response to slowing economic growth, the government has taken a number of steps in recent months. These include lowering the amount of cash that banks must keep as reserves and easing restrictions on financing to help the property market.

Analysts remain sceptical that the steps will yield quick results because Beijing has not announced a full reopening from COVID containment.

Nearly three years into the pandemic, some local governments have started to ease some lockdowns, quarantine rules, and testing requirements that have hurt the economy and made many people angry and tired.

“The move away from zero COVID and the increase in support for the property sector will eventually lead to a recovery in domestic demand,” Evans-Pritchard said. However, this likely won’t happen until the second half of next year.

Related: Caution lingers as signs of China’s openness accumulate.

Since the Chinese yuan has already dropped sharply this year, policymakers don’t have much room to move. This is because a big monetary policy stimulus at home at a time when interest rates around the world are rising quickly could cause a lot of money to leave the country.

The Ukraine war, which led to a rise in already high inflation around the world, has made geopolitical tensions worse and hurt business prospects even more.

In the first three quarters of this year, China’s economy only grew by 3%, which is much less than the annual goal of around 5.5%. Analysts think that growth for the whole year will be just over 3%.

The chief economist at Pinpoint Asset Management, Zhiwei Zhang, said that China’s “bumpy reopening” process should be taken into account.

“As global demand falls in 2023, China will have to rely more on domestic demand,” he said.