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Industrial output and retail sales in China slumped, indicating the government’s strict Covid Zero policy is causing the world’s second-largest economy to buckle and helping explain a larger-than-expected cut in a key interest rate.
In the US, firmer retail sales suggest consumers aren’t yet deterred by higher inflation, though increased reliance on credit cards may temper the optimism. The UK is suffering from its worst inflationary pressures in 40 years.
Russia’s gross domestic product rose at a slower pace in the first quarter, hindered by the initial impact of sanctions, and its central bank sees the economy shrinking as much as 10% this year.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
China’s economy is paying the price for the nation’s Covid Zero policy, with industrial output and consumer spending sliding to the worst levels since the pandemic began and analysts warning of no quick recovery.
Chinese banks cut a key interest rate for long-term loans by a record amount, a move that would reduce mortgage costs and may help counter weak loan demand caused by a property slump and Covid lockdowns. The five-year loan prime rate, a reference for home mortgages, was lowered to 4.45% from 4.6%, according to a statement by the People’s Bank of China.
Japan’s cabinet approved a 2.7 trillion yen ($21 billion) additional budget to help households and firms hit by higher prices, as the government looked to shore up support ahead of a key summer election.
The ties that bind the global economy together, and delivered goods in abundance across the world, are unraveling at a frightening pace.
The global shipping bottlenecks rattling industries and consumers in the pandemic era were plain to see for the politicians, economists and investors gathering for a Latin American economic forum in Panama this week. There were 101 vessels waiting their turn to make the 40-mile journey across the Panama Canal Wednesday, six more than the average so far this year, according to data compiled by Bloomberg.
Recent gains in overall retail sales, combined with solid earnings reports from retailers, foreshadow strong second-quarter consumption and suggest consumers aren’t yet deterred by higher inflation. But the spending binge -- fueled more recently by increased credit card use -- might not last.
Like a supertanker, US debt-service costs only change course very slowly. But it’s happening now -- and from Washington’s point of view, the new direction is the wrong one: they’re heading up.
Britain’s worst bout of inflation in 40 years is quickly becoming a crisis both for Prime Minister Boris Johnson’s government and the Bank of England. Consumer prices surged 9% in the year through April, the fastest rate since March 1982, the Office for National Statistics said Wednesday in a report that marked a bleak moment for living standards.
South Africa’s central bank this week raised borrowing costs by the most in more than six years, while Egypt delivered its largest hike in nearly half a decade to tackle soaring inflation. The Philippine central bank raised its key rate for the first time since 2018 and Paraguay lifted its benchmark to the highest level in more than a decade.
Russia’s economic growth slowed in the first quarter, reflecting the initial impact of sanctions imposed following President Vladimir Putin’s invasion of Ukraine.
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