World economy braces for supply hit as China battles COVID again
BNN Bloomberg
The global economy -- already struggling with war in Ukraine and the stagflation risks it’s fanning -- is bracing for greater disruption as China scrambles to contain its worst outbreak of COVID-19 since the pandemic began.
The global economy -- already struggling with war in Ukraine and the stagflation risks it’s fanning -- is bracing for greater disruption as China scrambles to contain its worst outbreak of COVID-19 since the pandemic began.
Since Wuhan two years ago, China has had relative success in minimizing disruption by bringing virus cases quickly under control. Now, the geographic spread of infections and higher transmissibility of the omicron variant is challenging the country’s hawkish pandemic strategy of aggressive testing and locking down whole cities or provinces.
If China fails to contain omicron’s spread, further movement restrictions would derail the economy’s promising start to the year, weakening a key pillar of global growth.
As manufacturer to the world, any disruptions to exports resulting in shortages could also drive up inflation internationally, just as central banks begin hiking interest rates, like the Federal Reserve is expected to do on Wednesday.
A survey of fund managers released Tuesday by Bank of America Corp. showed confidence in global growth was the lowest since July 2008 and expectations for stagflation jumped to 62 per cent. The survey was conducted in the week through March 10.
