Recession worries are swirling again as China’s Covid-19 lockdowns, the Ukraine war, and the cost of living crisis all threaten the global recovery, The Guardian reported.
China’s exports growth has tumbled to a two-year low, as the curbs introduced to battle Covid has hit factory production, disrupted supply chains and weakened domestic demand too, The Guardian reported.
Exports slowed to 3.9 per cent year-on-year in April, the weakest since June 2020.
Imports growth was flat (and imports from the US dropped by 1.2 per cent), as cities such as Shanghai were shut down to fight virus outbreaks.
April’s data shows the impact of China’s latest Covid restrictions, including the tight lockdown in Shanghai which have lasted six weeks, disrupting the operations of companies including Tesla and Apple.
Julian Evans-Pritchard, senior China economist at Capital Economics, says weakening foreign demand hit China’s exports, suggesting rising prices are now hitting consumer spending, The Guardian reported.
The sharpest falls were in shipments to the EU and the US, where high inflation is weighing on real household incomes.
The declines were also especially pronounced in electronics exports which suggest a further unwinding of pandemic-linked demand for Chinese goods.
Shares have dropped in most Asia-Pacific markets after China’s export growth hit its lowest since June 2020, early in the lockdown.
Japan’s Nikkei led the selloff, falling 2.5 per cent, while China’s CSI 300 has dropped almost 1 per cent, Australia’s S&P/ASX 200 is down 1.2 per cent, and South Korea’s KOSPI is down 1 per cent.
Investors are worried that central bankers will keep raising interest rates to cool inflation even as the world economy slows.