09.12.2022 - Baring the Great Financial Crisis and the first year of the Covid pandemic, global growth in 2023 could be the weakest in 30 years amid fading reopening tailwinds, ebbing workers purchasing power, monetary tightening and energy rationing. However, investors remain hopeful of a not-so-hard economic landing thanks to an eventual return to a low and stable inflation environment.
Lower inflation ahead…
The latest NBS business confidence survey suggests China’s economic activity contracted further in November amid a record Covid outbreak. The non-manufacturing PMI, which measures activity in the construction and services sectors, unexpectedly declined to 46.7 from 48.7 in October, while the manufacturing PMI fell to 48, the lowest reading since April(1). The sub-index measuring suppliers’ delivery times worsened further in November, a sign of supply disruptions with possible repercussions for the global inflation outlook. What’s more, according to a survey by China Beige Book International, about 53% of Chinese firms reported Covid cases in their workforce in November, the highest level since January last year. That said, an easing in the zero-Covid policy is taking effect as the authorities aim to limit the economic damage and to respond to the recent public appeals, which will however add to the risk of overwhelming the health care system. The November S&P Global world manufacturing business confidence index fell again to 48.8, pointing to an intensification of the downturn as the output sub-index (47.8) fell to a new low since June 2020 and a level rarely seen outside of recessions. There was some positive news on the price front, however, as price pressures continued to ease. More broadly, global inflation is on track to slow markedly, aided by fading bottlenecks in global supply chains and commodity price shocks ...
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