Home Argentina economy supply chains: China’s Covid lockdowns disrupt global supply chains

supply chains: China’s Covid lockdowns disrupt global supply chains

China’s shutdowns to contain Covid have hampered operations at the world’s biggest port in Shanghai and stalled activity in major cities, affecting supply chains for companies from Tesla Inc. to Apple Inc.

Monday’s trade data will provide clues to the extent of the damage. China’s export growth likely slowed to its weakest pace since June 2020, while imports likely contracted for a second month, a sign of weak consumer spending as millions of Shanghainese and elsewhere were confined to their homes.

As a global manufacturer, the disruptions in China are weighing on the global economy and adding another risk to the inflation picture. In Shanghai, where most of the population has been in some form of lockdown for more than five weeks, the government is trying to get production back on track. Yet many foreign companies still say they are unable to resume operations. Early indicators of the trade are not promising. South Korean exports, a barometer of global demand, rose by double digits in April, but shipments to China fell, suggesting China’s slowdown is a product of its own Covid restrictions.

What Bloomberg Economics says:

“Disruptions to production and deliveries can negatively impact shipments. The production and delivery components in official April PMI data deteriorated to the worst levels since the nationwide lockdown in early 2020.” –By Team Asia Economists.

Inflation data in China will also be a focus as shortages of food and other goods, also triggered by lockdowns, drive up costs. Consumer price growth is expected to pick up, while factory gate inflation likely remained elevated in April.

Top Communist Party leaders have pledged more stimulus to achieve an economic growth target of around 5.5% this year. Credit data for April, due this week, will show whether monetary and fiscal support has had the desired effect of fueling borrowing.

Meanwhile, Chinese Premier Li Keqiang warned of a “complicated and serious” employment situation. He asked all ministries and regions to prioritize measures to help businesses keep their jobs and overcome the current difficulties, according to a statement on Saturday evening.

Elsewhere, the US could see another high inflation figure, UK gross domestic product data for the first quarter could already point to a slowdown in growth and Mexico’s central bank is expected to raise its bonds again. interest rate.


Outside of China, highlights from Asia include a Wednesday rate decision in Malaysia, where authorities are likely to reverse the global tightening trend as inflation remains subdued and downside risks for the economy remain.

After the Reserve Bank of India’s surprise hike, April inflation data will come under scrutiny on Thursday as economists reassess their policy forecasts.

Indonesia and the Philippines release first quarter GDP data on Monday and Thursday. In Japan, data on wages and household spending will be released at the beginning of the week.


April’s Consumer Price Index report released on Wednesday is the high point of an otherwise quiet week for economic releases. Inflation is expected to have moderated on a monthly and annual basis, partly reflecting lower gasoline prices which have since recovered.

While inflation likely peaked in March at 8.5%, the highest in four decades, price pressures are expected to remain elevated, which will keep Federal Reserve officials on track to steadily raise costs. borrowing in the coming months.


Following Wednesday’s half-point hike in the Fed’s benchmark rate, investors will be watching for a series of speeches from central bankers, including John Williams, Christopher Waller, Thomas Barkin and Loretta Mester.

A US measure of prices paid to producers in April is due out on Thursday and should show some moderation in the pace of wholesale inflation. The week ends with a reading of consumer sentiment from the University of Michigan.

Europe, Middle East, Africa

Economists forecast a respectable 1% increase in UK GDP for the first quarter, although that may mask a period of no growth at all in March.

Thursday’s data will provide the backdrop to an outlook that the Bank of England says is turning sour, with double-digit inflation likely to crush any expansion towards the end of the year.


The BOE revealed this scenario on Thursday as it made a fourth straight rate hike. A perspective on that could emerge on Monday as policymaker Michael Saunders delivers a speech in London.

Economists said Germany’s ZEW indicator of investor expectations on Tuesday fell further in April from a level that was already the worst since the pandemic erupted in 2020.

Industrial production in the euro zone for the month of March due Friday has probably contracted significantly. Several European Central Bank policymakers will speak, including President Christine Lagarde on Wednesday.

Among the inflation reports due this week, that from the Czech Republic on Tuesday may attract attention, potentially hitting a new high above 13% for April.

That of Russia will be even higher. Economists expect inflation there to have topped 18%, a dramatic increase in the space of just two months – effectively doubling since the invasion of Ukraine. The central bank predicts further price spikes.


Other reports include Russian trade data on Wednesday, highlighting the impact of sanctions on imports and exports in March, and April car sales figures.

In Ghana, data on Wednesday is expected to show inflation accelerating further, from nearly 20% in March, which was the highest rate in more than a decade.

The country’s central bank meets later this month, with economists predicting it could raise rates by up to 200 basis points.

Latin America

Mexico releases monthly and bi-weekly consumer price data for April on Monday ahead of the central bank’s rate decision later in the week. Early estimates are that annual readings are stabilizing near two-decade highs for both baseline and major results.

With inflation now more than double the 3% target, most analysts expect Banxico to raise the benchmark rate to 7% on Thursday with a fourth consecutive half-point hike and an eighth consecutive increase overall. A consensus is around 8.5% as the probable level of the key rate at the end of the year.


In Brazil, look for April’s annual consumer price reading on Wednesday to top 12%, more than three times the target. After raising its key rate to 12.75% on May 4, the central bank signaled that an 11th consecutive rate hike is likely for next month.

Expect Argentina’s monthly consumer prices to have cooled after March’s 6.7% jump, even as the annual pace topped 56%. Many local economists see this reaching 60% by the end of the year.


In Peru, the central bank, which is battling the fastest inflation in two decades, is expected to extend a record tightening cycle and raise the policy rate to 5%. As with its regional counterparts, the bank is not done yet.