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A range of indicators in China, Japan, South Korea, and Taiwan show the region’s economic activity being dragged down by China’s COVID lockdowns, inflation in Europe, and the Ukraine war and its sanctions, The Wall Street Journal reported.
China’s imports declined for the first time in two years and exports fell 6 percent in March compared to February, according to government figures released 13 April.
Also in China, “consumption is falling short,” Kristalina Georgieva, managing director of the International Monetary Fund, said in a 20 April press briefing. “It is not recovering as strongly as necessary.”
Europe’s energy prices have soared to record levels even before the Ukraine war’s sanctions worsened them. Inflation is running at decades-long highs in Europe and the Americas. Central banks are jacking up interest rates.
Also, China’s growing number of severe lockdowns is freezing global trade.
In mid-month, China extended Shanghai’s lockdown, crippling the world’s busiest port and shutting in the city’s 25 million residents.
On 15 April, the Zhengzhou Airport Economic Zone, a key manufacturing district, imposed a 14-day lockdown that will “be adjusted according to the epidemic situation.”
On the same day, the city of Xian urged residents to limit their travel to essential trips outside home and asked businesses to have employees work from home or live at their workplaces.
The city government in Suzhou has declared that all employees able to work at home must do so until further notice and that businesses and residential compounds bar entry to non-essential people and vehicles.
“Less trade is one more reason to expect global growth to throttle way back this year,” Mark Zandi, chief economist at Moody’s Analytics, told the WSJ.
The global economy will expand by 2.8 percent this year, the World Trade Organization (WTO) said on 12 April, less than the 3 percent average growth that the world’s GDP notched from 2010 through 2019 and less than a third of the 9.8 percent booked in 2021.
The Ukraine war, sanctions, and China’s lockdowns “are again disrupting seaborne trade at a time when supply chain pressures appeared to be easing,” the WTO noted.
In China specifically, the lockdowns are throttling consumer spending and shrinking factory production in an economy already damaged by tighter regulations on the financial and tech sectors and the continuing real estate crisis that we have documented in “China’s Real Estate Troubles Ripple Across Emerging Markets” (26 Oct 2021) and “China’s Real Estate Crisis Grows” (9 Nov 2021).
TRENDPOST: As China goes, so goes the world.
The COVID-driven slowdown in China will ripple around the globe, heightening inflation, worsening shortages, and speeding the onset of Dragflation, our Top 2022 Trend: nations’ GDPs will contract while prices continue to rise.