Will China’s Zero Epidemic Policy Slow Economic Growth?

The Covid-19 lockdown in Shanghai has clouded China’s economic outlook for the rest of 2022.Investors will pay particular attention Reading this week First-quarter gross domestic product, which will set the tone for how aggressively policymakers in Beijing need to act to shore up the world’s largest emerging market.

this Shanghai closed city — China’s financial capital — started in late March, meaning its full impact won’t be recorded in the first-quarter report. However, the GDP data will provide clues on the extent of the impact of the coronavirus outbreak on China’s economy, as it includes less severe lockdowns in manufacturing hubs Shenzhen and Jilin.

Economists polled by Reuters expect gross domestic product to grow 4.4 percent year-on-year in the first quarter. ANZ economist Dhiraj Nim said the headline figure would mask a much weaker quarter-on-quarter increase, forecast at just 0.6%, better reflecting the decline from earlier lockdowns that implemented China’s zero-coronavirus strategy.

“This stance has also contributed to the recent lockdown in Shanghai as the pandemic has spread, exacerbating downside risks to GDP in the second quarter,” said Nim. He doesn’t expect China to control the current outbreak until the end of April, ANZ Bank said in a statement. This scenario is expected to reduce GDP growth this year from 8.1% 2021.

But he added that “if China’s slowdown deepens, it will force a re-examination of the region’s growth prospects”.

ANZ estimates that for every 1 percentage point decline in the country’s economic growth over the past 15 years, growth in the rest of Asia has fallen by 0.6 percentage points.There are now more Asian central banks Coping with soaring inflationpolicymakers in the region will be more sensitive than ever to any downturn in Chinese growth. Hudson Lockett

Will raging inflation dampen UK retail sales?

Retail sales in the UK will weaken in the coming months as Covid-19 restrictions ease, and consumers will turn to spending more on services and less on goods as they cut back on the cost of living crisis.

Martin Beck, chief economic adviser at EY Item Club, said: “The normalisation of consumption patterns and a return to activities like eating out and going to the movies could mean less spending in the retail sector.”

In February, Britons spent 0.7% more in sterling terms than the previous month, but bought 0.3% less as goods became more expensive.As consumers grapple with consumer price inflation soaring to 7%a 30-year high.

“Some households may be able to tap into the savings they’ve built up during the pandemic, but many don’t have that luxury,” Baker said. “So retail demand is likely to come under increasing pressure as we move into 2022.”

Bethany Beckett, an economist at Capital Economics, also expects “it may become more difficult for retailers” in the coming months “as the cost of living crisis starts to have a bigger impact”.

consumer confidence fall Significant growth and high inflation in March could mean a prolonged period of negative real wage growth. “Against this backdrop, it seems almost inevitable that households will continue to cut spending,” Beckett said. Valentina Romee

How does the Ukraine war affect the eurozone economy?

The remarks of ECB President Christine Lagarde were unabashed. She said last week that a Russian invasion of Ukraine could do more damage to business confidence and investment than the outbreak. The S&P Global Purchasing Managers’ Index for April, due to be released on Friday, will reveal the extent to which European companies are already feeling the impact.

Russian President Vladimir Putin’s decision to invade Ukraine in late February sent food and energy prices soaring and pushed euro zone inflation to record levels 7.5% last month. Some analysts worry that Europe may be heading for a recession or a 1970s-style stagnation — a period marked by rapid inflation and slow economic expansion.

Economists expect the composite euro zone purchasing managers’ index, which combines responses from executives of services and manufacturing companies, to fall to 54 in April from 54.9 in March. Scores above 50 indicate that the majority of respondents reported expansion.

Conflict in Eastern Europe has already weighed on sentiment, with German investor confidence – as measured by the Zew Institute’s Economic Sentiment Index – dipping to its lowest since last week. March 2020.

“It’s not looking particularly rosy,” said Caspar Rock, chief investment officer at Cazenove Capital. “I wouldn’t be surprised if the print value was below 50.” George Steele